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Illinois worker’s compensation benefits. In 2001, petitioner
continued to receive worker’s compensation benefits of
$15,738.32.
In 2001, petitioner’s attorney advised her to file for
Social Security Disability Insurance benefits. In April of 2001,
petitioner applied for Social Security benefits. According to
Form SSA-1099, Social Security Statement, issued by the Social
Security Administration, petitioner received Social Security
benefits of $4,422.40 for taxable year 2001. Form SSA-1099 for
taxable year 2001 also shows that there was a worker’s
compensation offset in the amount of $4,422.40. Petitioners did
not report any Social Security benefits on their joint Federal
income tax return for 2001.
On April 12, 2004, respondent issued to petitioners a notice
of deficiency that determined petitioners failed to include in
gross income for the taxable year 2001 the amount of $3,7592 as a
result of adjustments for taxable Social Security benefits under
section 86. Further, the determination resulted in computational
adjustments causing the disallowance of a portion of the
deduction claimed by petitioners for medical expenses.
2Respondent calculated this amount as 85 percent of the
$4,422.40 in Social Security benefits for 2001.
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