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respondent’s determination that petitioner must include $7,340 of
gambling winnings in gross income. We further sustain
respondent’s determination that petitioner is entitled to deduct
gambling losses of $7,340.3
B. Social Security Benefits
Section 86 taxes Social Security benefits pursuant to
formula. If the sum of the taxpayer’s adjusted gross income
(with modifications not relevant here) and one-half of the Social
Security benefits received during the year exceeds the applicable
“base amount”, then a portion of the Social Security benefits is
includable in gross income. Sec. 86(a) and (b). For 2001, the
base amount was $25,000 for an unmarried taxpayer not filing a
joint return. Sec. 86(c)(1). Once a taxpayer exceeds this base
amount threshold, Social Security benefits are includable in
income in an amount equal to the lesser of (1) one-half of the
Social Security benefits received during the year or (2) one-half
of the amount by which the taxpayer’s modified adjusted gross
income plus one-half of the Social Security benefits received
during the year exceeds the $25,000 base amount. Sec. 86(a). An
additional amount of Social Security benefits may be includable
3 The standard deduction for 2001 is $5,650; thus
petitioner will receive some tax benefit from an itemized
deduction of $7,340. Petitioner had no other itemized deductions
for 2001.
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Last modified: May 25, 2011