Thomas Wayne and Rosalie Geraldine Keene - Page 4

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          calculated that his taxable Social Security benefits for 2003               
          were $1,3761 and reported that amount on his 2003 tax return.               
          Respondent determined that petitioner’s taxable Social Security             
          benefits totaled $10,216.15, $8,840.15 greater than the amount              
          reported by petitioner.                                                     
                                     Discussion                                       
               Petitioners contend, inter alia, that the Workers’                     
          Compensation benefits petitioner received from DOL are not                  
          taxable because they were not paid by the SSA.2  We disagree.               

               1The SSA letter petitioner used to calculate his taxable               
          Social Security benefits states that petitioner’s monthly Social            
          Security benefits for 2003 would be $192.70, minus a $58.70                 
          deduction for Medicare, resulting in $134 to be deposited in                
          petitioner’s bank account each month.                                       
               It is unclear how petitioner determined his taxable Social             
          Security benefits totaled $1,376, because $134 multiplied by 12             
          months equals $1,608.  We note that $192.70 multiplied by 12                
          months equals $2,312.40, and that the difference between                    
          petitioner’s $12,019 net Social Security benefits and the $9,706            
          paid by DOL is $2,313.                                                      
               2Petitioners also contend that the issue in the instant case           
          was previously decided in their favor in a Tax Court case at                
          docket No. 22889-04S regarding their 2002 taxable year.                     
          Petitioners also rely on a letter from respondent’s Appeals                 
          Office dated Mar. 8, 2005, implying that respondent wrongly                 
          included petitioner’s workers’ compensation benefits in                     
          determining petitioners’ Social Security benefits for 2003.                 
               We note that respondent and petitioner signed an agreed                
          decision in the case at docket No. 22889-04S based on what                  
          respondent now contends was an erroneous conclusion by                      
          respondent’s Appeals Office.  We also note that after                       
          respondent’s Appeals Office realized the error contained in the             
          Mar. 8, 2005, letter to petitioners, respondent’s Appeals Office            
          sent another letter dated July 18, 2005, to petitioners informing           
                                                             (continued...)           





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