Robert L. and Sara J. Helm - Page 3




                                        - 2 -                                         
               Respondent determined deficiencies in petitioners’ Federal             
          income taxes as shown below:                                                
               Docket No.          Year           Deficiency                          
               13170-00S           1998           $1,133                              
               3727-02S            1999           2,674                               
               After a concession by respondent,2 the sole issue for                  
          decision is whether the amount of income resulting from                     
          petitioners’ conversion of their traditional Individual                     
          Retirement Accounts (IRA) to Roth IRAs (conversion income) is an            
          item of income for purposes of calculating whether petitioners’             
          Social Security benefits are taxable.  We hold that it is.                  
          Background                                                                  
               Most of the facts were stipulated, and they are so found.              
          Petitioners resided in Howard, Ohio, at the time that their                 
          petitions were filed with the Court.                                        
               A.  Petitioners’ IRA Conversions                                       
               In 1998, petitioner Robert L. Helm converted his traditional           
          IRA with Fidelity Mutual to a Roth IRA with the same trustee.               
          The total amount converted was $59,758.  In addition, petitioner            
          Sara J. Helm converted her traditional IRA with Fidelity Mutual             
          to a Roth IRA with the same trustee in 1998.  The total amount              
          converted was $25,872.90.                                                   




               2  For 1998, respondent concedes that petitioners received             
          $980 of interest income rather than the greater amount reported             
          by them on their return for that year.                                      




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