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Respondent determined a deficiency in petitioners’ Federal
income tax for 1997 in the amount of $1,564.
After concessions by the parties,2 the issues for decision
are as follows:
(1) Whether petitioners may exclude from gross income
disability benefits received by petitioner D. Lloyd Thomas. We
hold that petitioners may exclude such benefits.
(2) Whether petitioners received interest on an overpayment
of income tax for 1993. We hold that petitioners received such
interest.
Background
Some of the facts have been stipulated, and they are so
found. Petitioners resided in Copperas Cove, Texas, at the time
that their petition was filed with the Court.
At all relevant times, petitioners utilized the cash
receipts and disbursements method of accounting in computing
their taxable income. See sec. 446(c)(1).
2 Petitioners concede that in 1997 they were credited with
interest on overpayments of income tax for 1992, 1994, and 1995
in the amounts of $49.86, $161.84, and $7.03, respectively, as
determined by respondent in the notice of deficiency.
Respondent concedes that the deficiency determined in the
notice of deficiency ($1,564) is overstated because of a
computational error and that the correct amount of the deficiency
is $1,451.
The parties agree that adjustments to petitioners’ IRA
deduction and Schedule A deductions are computational matters,
the resolution of which depends on our disposition of the two
disputed issues identified above.
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