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Discussion
Social Security benefits are subject to income tax treatment
pursuant to section 86. The amount of such benefits to be
included in gross income is subject to a statutory formula. See
sec. 86(a) through (d). Section 86 requires inclusion of the
payments if the sum of the taxpayer’s adjusted gross income (with
certain modifications not relevant here) and one-half of the
Social Security benefits received, exceeds a specified “base
amount”. Jelle v. Commissioner, 116 T.C. 63, 71 (2001). This
base amount is $25,000 for a taxpayer, like petitioner, who is
not married and did not file a joint return. See sec. 86(c)(1).
Since petitioner reported adjusted gross income of $29,278 and
received Social Security benefits totaling $8,756 during the 2000
taxable year, the base amount threshold is clearly exceeded. We
therefore sustain respondent’s determination that a portion of
$8,756 petitioner received in 2000 as Social Security benefits
must be included in petitioner’s gross income for that taxable
year.
We note that petitioner, like other taxpayers, has
questioned the fairness of section 86. See, e.g., McAdams v.
Commissioner, 118 T.C. 373, 379 (2002). However, “No scheme of
taxation, whether the tax is imposed on property, income, or
purchases of goods and services, has yet been devised which is
free of all discriminatory impact.” San Antonio Indep. Sch.
Dist. v. Rodriguez, 411 U.S. 1, 41 (1973). And this Court has
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Last modified: May 25, 2011