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Respondent determined a deficiency in petitioners’ Federal
income tax for the taxable year 2001 in the amount of $4,238.
The issue for decision is whether a lump-sum payment of
Social Security disability benefits, received by petitioner Teri
A. Davis in 2001, is includable in petitioners’ gross income for
2001 (pursuant to the formula in section 86(a)), even though a
significant portion of the payment is attributable to benefits
for 1999 and 2000. We hold that it is.
Background
Some of the facts have been stipulated, and they are so
found.
At the time that the petition was filed, petitioners resided
in Canton, New York.
In 1999, petitioner Teri A. Davis (Mrs. Davis) suffered an
injury and applied for Social Security disability benefits.
However, the Social Security Administration resisted her claim.
Mrs. Davis then retained legal counsel. Ultimately, after many
months, Mrs. Davis prevailed in the dispute, and she received a
lump-sum payment of benefits in 2001.
For 2001, Mrs. Davis received a Form SSA-1099, Social
Security Benefit Statement, from the Social Security
Administration. Box 3 of that form reported “benefits for 2001”
of $21,656, which was described as follows:
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Last modified: May 25, 2011