Robert L. and Sara J. Helm - Page 5




                                        - 4 -                                         
                                        1998             1999                         
          Line 8a.  Taxable interest                     [1]$980.00          $1,037.99
          Line 9.   Ordinary dividends           6,265.99    6,395.04                 
          Line 13.  Capital gain or (loss)       14,473.86   19,902.36                
          Line 15a. Total IRA distributions$85,630.90         ---                        
          Line 15b. Taxable amount               21,407.73    [2]21,407.50            
          Line 33.  Adjusted gross income        43,127.58    48,742.89               
               1  In 1998, petitioners originally reported $1,016.20 of interest income
          but actually received only $980.  See supra note 2.                         
               2  We note that in 1999 petitioners reported only $21,407.50 as        
          conversion income instead of $21,407.73.  There is nothing in the record to 
          explain this discrepancy.                                                   
               On their returns for 1998 and 1999, petitioners did not                
          report that they received any Social Security benefits, nor did             
          they report that any portion of their benefits was taxable.                 
               D.  Respondent’s Deficiency Notices                                    
               In the notices of deficiency, respondent determined that               
          petitioners received, but failed to report, taxable Social                  
          Security benefits of $7,434 for 1998 and $13,500 for 1999, which            
          resulted in the deficiencies at issue.  Respondent concluded that           
          petitioners’ conversion income is included in income pursuant to            
          section 408A and, therefore, that petitioners’ Social Security              
          benefits are taxable pursuant to section 86.                                
          Discussion3                                                                 
               A.  Petitioners’ Contention                                            
               In their petition, petitioners contend that respondent erred           
          because:                                                                    


               3  We need not decide whether sec. 7491, concerning burden             
          of proof, applies to the present case because the facts are not             
          in dispute and the issue is one of law.  See Higbee v.                      
          Commissioner, 116 T.C. 438 (2001).                                          




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011