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B. 2001 and 2002
1. 2001
As will become apparent, it is important to keep in mind
that respondent concedes two of the four proposed income
inclusions for 2001: (1) cancellation of indebtedness income in
the sum of $169,302, because the debt had not been discharged by
the creditor, and (2) $57 of dividend income relating to stock
that belonged to petitioner’s ex-wife. See supra note 5.
Respondent’s remaining proposed inclusions in petitioner’s income
for 2001 are (1) the retirement distribution of $3,342.12 from
Mobil Pension Trust (which was reported by petitioner on the 2001
Form 1040) and (2) Social Security benefits of $17,578.
In arguing that petitioner “realized taxable income in 2001
in the amount of $17,578” from Social Security benefits,
respondent has apparently overlooked the impact of his
concessions for 2001 upon the computation of includable Social
Security benefits under section 86. Pursuant to section
86(a)(1)(B), (b), and (c)(1)(A), petitioner is taxable on no more
than the excess of the sum of his modified adjusted gross income
(not including his Social Security benefits) plus one-half of his
2001 Social Security benefits over $25,000 (petitioner’s “base
amount” under section 86(c)(1)(A)). Petitioner and respondent
agree that his only item of gross income, other than his Social
Security benefits (assumed, for this purpose, to be $17,616 (see
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Last modified: November 10, 2007