Walter A. and Alfreda Kocot - Page 5

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               Subsequent to mailing the April 5 letter, respondent                   
          discovered what was believed to be a second error.  Petitioners             
          claimed total income tax withholding of $6,682.75 on their 2002             
          return.  Respondent reduced this amount by $752 to reflect income           
          tax withheld on a pension plan distributed from Christ Hospital             
          to petitioner Alfreda Kocot.  This reduction occurred as a result           
          of petitioners’ erroneous attachment of Forms 1099-R,                       
          Distribution from Pensions, Annuities, Retirement or Profit-                
          Sharing Plans, IRAs, Insurance Contracts, etc., for both taxable            
          years 2001 and 2002 to their 2002 return.  Although the $752                
          reduction was reflected on the April 5 letter, correspondence               
          between the parties subsequently resolved this discrepancy.                 
               On June 14, 2004 (June 14 letter), respondent sent a third             
          revised proposed change letter that restored petitioners’ total             
          claimed income tax withholding to $6,682.75, yet kept the amount            
          of taxable Social Security benefits received at $24,329.  As a              
          result of these changes, the June 14 letter computed an income              
          tax deficiency of $986.                                                     
               Respondent issued a notice of deficiency in the amount of              
          $986 on August 30, 2004.  Petitioners paid the deficiency on                
          October 4, 2004, and interest thereon on January 3, 2005.                   
          Petitioners timely filed their petition in the underlying case on           
          November 22, 2004.                                                          

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