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worked was approximately 7 miles. Thus, on days both spouses
worked, Mrs. Alderman made roughly two round trips to Atmore and
one to Monroeville.
Petitioners timely filed a joint Form 1040, U.S. Individual
Income Tax Return, for the 2000 taxable year. They reported
wages of $53,854 and a State and/or local income tax refund of
$393, for total income and adjusted gross income of $54,247.
Petitioners chose to itemize their deductions and attached a
corresponding Schedule A, Itemized Deductions. The Schedule A
reflected total itemized deductions of $18,844, which amount
included a deduction for medical and dental expenses of $5,796
(computed by applying the 7.5 percent of adjusted gross income
limitation to total reported medical and dental expenses of
$9,865). The return then showed taxable income, after
subtracting itemized deductions ($18,844) and two exemptions
($5,600), of $29,803; tax of $4,474; withholding of $6,201; and a
refund amount due of $1,727.
On September 9, 2002, respondent issued to petitioners a
statutory notice of deficiency for the year 2000. Respondent
determined therein that petitioners failed to report the taxable
portion of Social Security income received by Mr. Alderman. The
notice also made correlative adjustments to petitioners’ itemized
deductions based on the increased adjusted gross income.
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