T.C. Summary Opinion 2001-152
UNITED STATES TAX COURT
WILLIE CLAYBORN, JR. & JACQULYN A. CLAYBORN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 978-00S. Filed September 25, 2001.
Willie Clayborn, Jr. and Jacqulyn A. Clayborn, pro sese.
H. Clifton Bonney, Jr., for respondent.
DINAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
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effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Respondent determined a deficiency in petitioners’ Federal
income tax of $2,340 for the taxable year 1997.
The sole issue for decision is whether certain Social
Security disability benefits are includable in petitioners’ gross
income.
Some of the facts have been stipulated and are so found.
The stipulations of fact and the attached exhibits are
incorporated herein by this reference. Petitioners resided in
Richmond, California, on the date the petition was filed in this
case.
Petitioners filed a joint Federal income tax return for
taxable year 1997. They reported $58,534 in adjusted gross
income on the return. They received $13,857 in Social Security
disability benefits in 1997, but did not report any portion of
this amount on their return. Respondent issued petitioners a
statutory notice of deficiency with the determination that they
had unreported income of $11,778 from the Social Security
benefits.1
1
Respondent also determined that petitioners had unreported
income of $17 in interest and $52 in dividends. Respondent
concedes the interest adjustment and petitioners do not dispute
the dividends adjustment.
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The inclusion of Social Security benefits in gross income is
governed by section 86. Social Security disability benefits are
treated in the same manner as other Social Security benefits.
Sec. 86(d)(1); Thomas v. Commissioner, T.C. Memo. 2001-120.
Taxpayers who file a joint return and whose modified adjusted
gross income plus half of the Social Security benefits received
is greater than $32,000 must include a portion of the benefits in
their income. Sec. 86(a) through (c). The portion, never
exceeding 85 percent, varies according to a formula set forth in
section 86(a). Petitioners had modified adjusted gross income of
at least $58,534, see sec. 86(b)(2), and received benefits of
$13,857. Because their modified adjusted gross income plus half
their benefits exceeds $44,000 by at least $21,463, they must
include in income 85 percent of the benefits. See sec. 86(a),
(c). Thus, respondent is correct in his determination that
petitioners must include in income 85 percent of the Social
Security disability benefits, or $11,778.
Petitioners do not dispute receiving $13,857 in Social
Security benefits. Their sole argument is that the IRS has made
inconsistent rulings regarding whether the benefits are taxable.
They assert that an IRS employee agreed that the benefits were
not taxable with respect to a prior year. We note that the law
governing this area has changed over the years. However, we need
not address whether the employee’s treatment was correct with
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respect to petitioners’ situation in a prior year. Regardless of
the soundness of the employee’s treatment, respondent is not
bound by advice given to a taxpayer which is based upon a mistake
of law, Dixon v. United States, 381 U.S. 68 (1965); Auto. Club v.
Commissioner, 353 U.S. 180 (1957), and we have found that
respondent correctly applied the law in effect in 1997 to
petitioners’ situation in that year.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
under Rule 155.