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Respondent determined a deficiency in petitioner’s Federal
income tax of $725 for the taxable year 1997.
The issue for decision is whether certain workers’
compensation benefits received by petitioner’s wife in lieu of
Social Security disability benefits are includable in
petitioner’s gross income.1
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Canisteo, New York, on the date the petition was filed in this
case.
There is no factual dispute in this case. Petitioner and
his wife, Janice R. Grace, filed a joint Federal income tax
return for taxable year 1997. During 1997, Mrs. Grace received
Social Security benefits of $4,296 and workers’ compensation
benefits of $2,955.60. The amount of the Social Security
benefits Mrs. Grace received was reduced by the amount of
workers’ compensation benefits she received. Petitioner and Mrs.
Grace reported on their return the amount they had received as
Social Security benefits, but did not report any portion of the
amount that they had received as workers’ compensation benefits.
In the statutory notice of deficiency, respondent increased the
1Petitioner does not dispute respondent’s determination that
he received $94 in unreported interest income.
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