D. Lloyd and Betty Thomas - Page 8




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               B. Interest Income                                                     
               Petitioners admitted at trial that they received a refund              
          check from respondent in 1997 and that such check pertained to              
          the taxable year 1993.  However, petitioners contend that they              
          did not receive any interest.  In this regard, petitioners rely             
          on that part of the respondent’s notice dated October 6, 1997,              
          stating:  “Amount Of Interest You Earned on Overpayment ...                 
          $.00".  According to petitioners, this statement demonstrates               
          that they neither received nor were credited with any interest on           
          their 1993 overpayment of income tax.  We disagree.                         
               Petitioners read the notice dated October 6, 1997,                     
          myopically.  That notice clearly states that in addition to the             
          $351.59 of tax that petitioners would receive as a refund, “Any             
          Interest Due You Will Be Added”.  In that regard, the record                
          clearly demonstrates that respondent did, in fact, “add” interest           
          to petitioners’ refund, specifically $311.84, which was part of             
          the $663.43 check that was issued on or about October 6, 1997.              
          Accordingly, we hold that petitioners failed to report interest             
          income in the amount of $311.84.  Respondent’s determination is             
          sustained.                                                                  
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   










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