Leroy J. Klingaman - Page 8

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          in income under certain circumstances not applicable to this                
          case.  Sec. 86(a)(2).                                                       
               With the inclusion of $7,340 in gambling winnings,                     
          petitioner’s adjusted gross income is $21,459.  The sum of                  
          petitioner’s adjusted gross income of $21,459 and one-half of               
          petitioner’s Social Security benefits of $5,544 exceeds the                 
          $25,000 base amount threshold by $2,003.  Since the amount of               
          Social Security benefits includable in income is equal to the               
          lesser of (1) one-half of the Social Security benefits received             
          of $5,544 or (2) one-half of the amount by which petitioner’s               
          modified adjusted gross income plus one-half of Social Security             
          benefits received during the year exceeded the $25,000 base                 
          amount, or $1,002 (one-half of $2,003, rounded to the nearest               
          whole dollar), we sustain respondent’s determination that                   
          petitioner must include $1,002 of Social Security benefits in               
          gross income.                                                               
               Reviewed and adopted as the report of the Small Tax Case               
          Division.                                                                   
               To reflect the foregoing,                                              

                                        Decision will be entered for                  
                                   respondent.                                        










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