-7-
contributions, we must presume that no employee contributions
were used to provide petitioner’s disability annuity payments.
Sec. 1.72-15(c)(2), Income Tax Regs.
Furthermore, we conclude that with 10 years of service,
petitioner was not eligible for retirement until she turned 62 on
November 10, 2003, and that the railroad retirement benefits she
received in 2001 were on account of a disability and are
includable in gross income.
In sum, petitioner’s disability annuity payments are not
subject to the return of capital provisions of section 72(b) (or
section 72(d)) and are fully taxable. See secs. 61(a)(9), (11),
72(a). Respondent’s determination on this issue is sustained.
2. Interest Payments
Section 61(a)(4) provides that interest payments are to be
included in gross income. Petitioners stipulated that they
received $241 in interest from the Internal Revenue Service and
$4 in interest from Provident Bank. Petitioners failed to
address in their petition the reason they did not include either
interest payment in their 2001 income. We find, therefore, that
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