- 4 - withdrawal. Petitioners, however, did not withdraw any of the interest credited to these accounts. Petitioners timely filed a joint Federal income tax return for 2000 using the cash basis method of accounting. On their return, petitioners reported only that they received $19 of interest income from Sterling Savings Bank. Petitioners did not report any interest income from Washington Mutual or from the CD accounts. In the notice of deficiency, respondent determined that petitioners received unreported interest income from Washington Mutual and from the CD accounts. Petitioners timely filed a petition with this Court challenging the notice of deficiency. In the petition, petitioners state: “The interest in question was not paid or received by us.” Discussion7 Generally, interest received by or credited to the taxpayer constitutes gross income and is fully taxable. Sec. 61(a)(4); sec. 1.61-7(a), Income Tax Regs. An item of gross income shall be included in income in the taxable year when received by the taxpayer unless under the taxpayer’s method of accounting the 7 The facts are not in dispute, and the issue is essentially one of law. Therefore, sec. 7491, concerning burden of proof, has no bearing on this case. See Higbee v. Commissioner, 116 T.C. 438 (2001).Page: Previous 1 2 3 4 5 6 7 8 Next
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