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disability insurance benefits as well as the disability
compensation that he received from the Veterans’ Administration.
By notice of deficiency, respondent determined that Mr.
Reimels’s Social Security disability insurance benefits were
includable in petitioners’ gross income to the extent provided in
section 86.
Discussion
I. Inclusion of Social Security Benefits in Gross Income
Before 1983, Social Security benefits were excluded from the
recipient’s gross income. See, e.g., Rev. Rul. 70-217, 1970-1
C.B. 13. This longstanding practice ended with the enactment of
section 86 as part of the Social Security Amendments of 1983,
Pub. L. 98-21, sec. 121(a), 97 Stat. 80. The legislative history
indicates that Congress made this change to shore up the solvency
of the Social Security trust funds and to treat “more nearly
equally all forms of retirement and other income that are
designed to replace lost wages”. S. Rept. 98-23, at 25 (1983),
1983-2 C.B. 326, 328.
Section 86 requires the inclusion in gross income of up to
85 percent of Social Security benefits received, including Social
Security disability insurance benefits.4 See, e.g., Joseph v.
4 Sec. 86(d)(1)(A) defines Social Security benefits to
include any amount received by reason of entitlement to a monthly
benefit under tit. II of the Social Security Act, 42 U.S.C. secs.
(continued...)
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