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On June 20, 2005, respondent issued to petitioner and Mrs.
Jacobs a statutory notice of deficiency for 2003.
Discussion
The Commissioner’s determinations are presumed correct, and
generally taxpayers bear the burden of proving otherwise. Rule
142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).1
Petitioner argues that the Social Security benefits received
by Mrs. Jacobs in 2003 are excludable from gross income because
they were disability payments. Even if Mrs. Jacobs had received
Social Security benefits by reason of a disability, the benefits
might be taxable under section 86(a).
Prior to 1984, certain payments made in lieu of wages to an
employee who was retired by reason of permanent and total
disability were excludable from the employee’s gross income under
section 105(d). However, the Social Security Amendments of 1983,
Pub. L. 98-21, sec. 122(b), 97 Stat. 87, repealed the limited
exclusion of disability payments provided by section 105(d),
effective with respect to taxable years beginning after 1983.
Since 1984, Social Security disability benefits have been treated
in the same manner as other Social Security benefits and are
subject to tax under section 86. Reimels v. Commissioner, 123
T.C. 245, 247 (2004), affd. 436 F.3d 344 (2d Cir. 2006); Joseph
1Since this case is decided by applying the law to the
undisputed facts, sec. 7491 is inapplicable.
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