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Respondent determined for 2003 a deficiency in petitioner
and Ivy D. Jacobs’s (Mrs. Jacobs) Federal income tax of $878.
The sole issue for decision is whether Social Security benefits
received by petitioner and Mrs. Jacobs during 2003 are includable
in gross income under section 86(a).
Background
The stipulation of facts and the exhibits received into
evidence are incorporated herein by reference. At the time the
petition in this case was filed, petitioner resided in Oakland,
California.
Petitioner and Mrs. Jacobs, now deceased, jointly filed for
2003, Form 1040, U.S. Individual Income Tax Return, reporting
Social Security benefits of zero and adjusted gross income of
$36,655.39. Mrs. Jacobs died on June 3, 2004.
On March 28, 2005, respondent issued to petitioner and Mrs.
Jacobs a notice known as a CP2000, or Revenue Agent Report (RAR).
The RAR notified petitioner and Mrs. Jacobs that they failed to
include in their gross income for 2003, Social Security benefits
of $2,556 and $9,908 received by petitioner and Mrs. Jacobs,
respectively, during that year. Petitioner made a Social
Security repayment of $169 in 2003. The RAR also indicated, as a
computational adjustment, that the proposed changes to their
gross income would reduce the amount of medical expenses allowed
as an itemized deduction on Schedule A.
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