Opinion
13970-19
01-13-2022
TERESA G. MURPHY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Christian N. Weiler, Judge
Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is
ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Christian N. Weiler at Denver, Colorado (remote hearing) on December 6, 2021, containing his oral findings of fact and opinion rendered at the conclusion of the trial.
In accordance with the oral findings of fact and opinion, decision will be entered for respondent.
Bench Opinion by Judge Christian N. Weiler December 6, 2021
Teresa G. Murphy v. Commissioner of Internal Revenue Docket No. 13970-19
THE COURT: This Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case.This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Hereinafter in this bench opinion, all section references are to the Internal Revenue Code of 1986, as amended, in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Petitioner resided in Colorado at the time her petition was filed, and appeared at trial pro se. Gretchen Altenburger appeared on behalf of respondent.
The parties filed with the Court a stipulation of facts, with accompanying exhibits, that are incorporated herein by this reference.
The issue for decision is the taxable amount of petitioner's 2016 social security benefits. This Court previously considered this same issue by petitioner for a prior tax year and issued a decision for the prior tax year in T.C. Summary Opinion 2019-32.
Background
Petitioner timely electronically filed a 2016 Federal income tax return on extension, and the IRS commenced examinations of the return, and timely issued a notice of deficiency to petitioner determining adjustments that would result in additional tax for the tax year in issue. Respondent determined a deficiency of $3,437 in petitioner's Federal income tax for the taxable year 2016 (the year in issue).
Petitioner subsequently filed a petition for redetermination with the Court challenging the notice of deficiency issued for year 2016.
Discussion
As a general rule, the Commissioner's determination of a taxpayer's liability in a notice of deficiency is presumed correct, and the taxpayer bears the burden of proving that the determination is incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Section 61(a) provides the general rule that gross income includes all income from whatever source derived. For year 2016 and for single taxpayers, section 86 provides that a taxpayer whose modified adjusted gross income plus one-half of the Social Security benefits received exceeds an "adjusted base amount" of $34,000 must include 85% of the Social Security benefits, including Social Security Disability benefits, into gross income. Sec. 86(a)(2), (c)(2); Reimels v. Commissioner, 123 T.C. 245, 247 (2004), aff'd, 436 F.3d 344 (2nd Cir. 2006).
After our review of the evidence and in consideration of the parties' arguments at trial, the Court finds petitioner received $24,298 in social security benefits and had other income of $73,822 during the 2016 tax year. For 2016, petitioner's modified adjusted gross income plus one-half of the Social Security benefits she received exceeded the "adjusted base amount" and therefore she is appropriately required to include 85% of her Social Security benefits received in taxable income. See sec. 86(a)(2).
Petitioner erroneously calculated the taxable portion of her social security benefits on her 2016 return by looking to the total potential disability award from her employer provided disability plan, before the required Social Security Disability benefit offset.
Based on the record before us, we hold that petitioner's Social Security benefits are subject to the provisions of section 86 and must be included in her gross income. Accordingly, we sustain the adjustments made by respondent as found in the Notice of Deficiency issued to petitioner on April 22, 2019.
At trial, respondent moved to seek an award under section 6673. The Court considered respondent's motion and denies respondent's request to impose sanctions and costs.
Consistent with the preceding discussion, decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case.
(Whereupon, at 11:16 a.m., the above-entitled matter was concluded.)