Lewis L. Reese - Page 5




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          adjusted gross income, exclusive of any Social Security benefits,           
          is $23,586.3  Petitioner did not include any portion of the                 
          benefits in gross income.  Respondent determined that 85 percent            
          of the benefits, or $22,409, is includable.                                 
               The inclusion of Social Security benefits in gross income is           
          governed by section 86.  Social Security disability benefits are            
          treated in the same manner as other Social Security benefits.               
          Sec. 86(d)(1); Thomas v. Commissioner, T.C. Memo. 2001-120.                 
          Under the general rule, taxpayers whose modified adjusted gross             
          income plus half of the Social Security benefits received is                
          greater than $25,0004 must include a portion of the benefits in             


          2(...continued)                                                             
               Total income                    32,389                                 
               IRA deduction          2,000                                           
               Moving expenses        7,900                                           
               Total adjustments              (11,900)1                               
               Adjusted gross income           20,489 2                               
               1This amount was written on top of an entry showing $9,900.            
               2This amount was written on top of an entry showing $22,489.           
          It is evident from petitioner’s return that the error lies not in           
          the adjusted gross income computation, but in the amount of                 
          moving expenses.  According to the Form 3903, Moving Expenses,              
          filed by petitioner with his return, he incurred a total of                 
          $9,900 in such expenses.  This indicates that while petitioner              
          discovered and corrected the error in the adjusted gross income             
          computation, he neglected to correct the error in the amount of             
          moving expenses reflected in the computation.  The Rule 155                 
          computation must account for this discrepancy in the notice of              
          deficiency.                                                                 
          3This amount is $20,490 plus the $3,096 in concessions made                 
          by petitioner.  See supra note 1 for the individual concessions.            
          4This amount is $32,000 in the case of joint returns and                    
          zero in the case of taxpayers who are married, who do not file a            
                                                             (continued...)           





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