William J. Phillips, Jr. and Matrona A. Phillips - Page 3




                                        - 2 -                                         
               Respondent determined a deficiency of $4,472 in petitioners’           
          1997 Federal income tax.  After concessions by the parties,2 the            
          issues are: (1) whether this Court has jurisdiction to consider             
          the propriety of a levy upon an individual retirement account               
          (IRA) of petitioner William J. Phillips, Jr. (petitioner-                   
          husband); (2) whether the proceeds of the levy are included in              
          calculating petitioners’ modified adjusted gross income (MAGI)              
          for purposes of determining eligibility for the earned income               
          credit (EIC); (3) whether respondent should have allocated 10               
          percent of the proceeds of the levy to petitioners’ 1997 tax                
          liability; and (4) whether petitioners are entitled to a                    
          deduction for payment of a portion of petitioner-husband’s                  
          section 6672 liability.  Petitioners resided in Wilkes-Barre,               
          Pennsylvania, at the time the petition was filed.                           
               This case was submitted fully stipulated pursuant to Rule              
          122.  The applicable facts may be summarized as follows.  In                
          1988, respondent assessed a penalty under section 6672(a) for               
          failure to collect and pay over employment taxes against                    


          2  Respondent concedes that petitioners are not liable for the              
          sec. 72(t) 10-percent additional tax in the amount of $1,045.               
          See Larotonda v. Commissioner, 89 T.C. 287 (1987).  Except as               
          discussed infra, petitioners concede that the proceeds of the               
          levy on petitioner-husband’s IRA are includable in petitioners’             
          gross income.  Additionally, in the petition, petitioners raised            
          the issue whether the notice of deficiency was valid.                       
          Petitioners did not address this argument at the hearing or in              
          their trial memorandum, and it is deemed to have been conceded.             
          See Levin v. Commissioner, 87 T.C. 698, 722-723 (1986), affd. 832           
          F.2d 403 (7th Cir. 1987).                                                   




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