Ozie R. M. Quarterman - Page 5

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          Office of Personnel Management (OPM) as paid to petitioner for              
          1995 and described by respondent as a “gross distribution” and              
          (2) $279 of bank account interest listed on Forms 1099-INT,                 
          Interest Income, issued by the “First Union National Bank Of DC”            
          (the bank) as paid to petitioner for 1995, and respondent’s                 
          allowance of a $2,500 personal exemption and a $3,900 standard              
          deduction, adjustments which give rise to taxable income of                 
          $22,604. Respondent gives petitioner credit for zero “PRE-PAID              
          CREDITS (withholding, ES tax payments etc.)”.                               
                                       OPINION                                        
          I.  Introduction                                                            
               A.  Petitioner’s Concessions                                           
               By the petition, petitioner assigned error to the deficiency           
          in (and additions to) tax determined by respondent.                         
          Specifically, petitioner claims that respondent erred in                    
          determining that she was taxable on her retirement income.  At              
          trial, she characterized her retirement income (pension) as a               
          “disability insurance annuity”.  Prior to trial, in a letter to             
          respondent dated November 13, 2002, petitioner’s counsel made the           
          same argument characterizing petitioner’s pension as “disability            
          insurance benefits”.  On brief, petitioner abandons that argument           
          as mistaken and concedes that her pension is taxable.  We accept            









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