- 4 - payments, and she continued to do so for the remainder of the year. The house was later sold, and the parties split the sale proceeds. During 1996, petitioner was aware that Ms. Morrison received monthly benefits. Petitioner also knew that Ms. Morrison had applied for and received a lump-sum benefit award separate from her monthly benefits and that a portion of that award was used to pay her divorce attorney. During 1997, petitioner and Ms. Morrison agreed to file a joint Federal income tax return for the 1996 tax year. Their tax return was professionally prepared by Mr. James West. Petitioner and Ms. Morrison met with Mr. West to discuss the joint tax return and to deliver documentation to facilitate the return preparation. At this meeting Ms. Morrison presented to Mr. West her Form SSA 1099--Social Security Benefit Statement (benefit statement), which detailed the benefits she received during 1996. Upon reviewing the benefit statement, Mr. West incorrectly told the parties that the entire benefit award was not taxable. Mr. West returned the benefit statement to Ms. Morrison and did not use it in the preparation of the joint return. Petitioner’s motivation for filing a joint return was to gain the benefit of Ms. Morrison’s and her family’s exemptions and itemized deductions in order to offset his taxable income. The joint return was initially audited by respondent during 1997,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011