James and Katie Gill - Page 4




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          Instructions then direct the taxpayer to report on line 13b                 
          (“Taxable amount (see page 28)”) the portion of the taxpayer’s              
          Social Security benefits that is taxable pursuant to the                    
          Worksheet on page 29 of the Instructions.3                                  
               In completing their 1999 Form 1040A, petitioners left line             
          13a blank and placed the figure “3807.00" in line 13b.  The                 
          figure “3807.00" represents one-half of the Social Security                 
          benefits that were received by Mrs. Gill in 1999; that figure               
          also correctly represents the amount of such benefits that was              
          properly includable in petitioners’ income for 1999.                        
               On their 1999 Form 1040A, petitioners reported adjusted                
          gross income in the amount of $41,053, taxable income in the                
          amount of $28,353, and tax in the amount of $4,256.4  Petitioners           
          enclosed with their return a check in the amount of the                     
          difference ($256.65) between their reported liability ($4,256)              
          and the total amount of their withholding ($3,999.35).                      
               Upon receiving petitioners’ 1999 return, respondent                    
          mistakenly concluded that petitioners had overreported their                
          income by $3,807; i.e., the amount reported on line 13b as the              
          taxable amount of Social Security benefits received.  Respondent            


               3  The Worksheet reflects the statutory formula set forth in           
          sec. 86 that determines the amount of Social Security benefits              
          that is includable in the taxpayer’s gross income.                          
               4  The parties agree that petitioners’ reported tax                    
          liability of $4,256 represents petitioners’ correct tax liability           
          for 1999.                                                                   





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