1 5 2 T.C. No . 6

UNITED STATES TAX COURT

LEVON J OHNSON, Pet i t i o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 1 3 9 4-1 6. Fi l edM arch 1 1 , 2 01 9
.

In 2 0 1 4 P recei v ed$ 4 ,4 6 0 i nm o n th l y ad v an ce p aym en t s o f t he p rem i u m t ax cred i t(PTC) u n d er t h e Affo rd ab l e Care Act . P’ s rep o rt edm o d i fi edad

ju s tedg ro s s i nco m e (M A GI) was wi th i nth e am o u ntn eed edt o qu al i fy h i m fo r t h e PTC. P d i dn o ti n cl ud e i nh i s M AGI al l So ci al Secu ri ty b en efi t s recei v eddu ri n g 2 0 1 4 , wh i ch i n cl u d eda l u m

p s u m at tri b u t ab l e t o 2 01 3 . In h is am en d ed2 0 1 4 Fed eral i n co m e t ax return P m ad e an I.R.C. s ec. 8 6(e) el ect i o nt o ex cl ud e a p o rt i o n o f t h e 2 0 1 3 So ci al Secu ri ty b en efi t s recei v eddu ri n g 2 0 1 4 fro m

h i s g ro s s i n co m e. P’ s am en d edretu rn s h o wed$ 1 ,2 5 0 o f ex ces s ad v an ce p aym en t s o f t h e PTC. Res p o nd en td et erm i n edth at P’ s ex ces s PTC was th e en t i re $ 4 ,4 6 0 b ecau s e, u n der I.R.C. s ec. 3 6 B, al l o f P’ s So ci al Secu ri ty b en efi t s recei v eddu ri n g 2 0 1 4 (i n cl u d i n g th o s e rel at i n g t o 2 0 1 3 ) m u s t b e i n cl u dedi n co m

pu t i n g wh et h er P was en t i tl ed t o t h e PTC. Th e i n cl u s i on o f al l So ci al Secu ri ty b en efi t s wo u l dres u l ti nP’ s h av i n g M AGI o u ts i d e o f t h e ran g e fo r en ti t l em en tt o the PTC.- 2
- Hel d : Fo r p u rp os es o f d et erm i n in g a t ax p ay er’ s el ig i b i l i ty fo r a PTC p u rs uan tt o I.R.C. s ec. 3 6 B, M AGI i n cl u d es al l So ci al Secu ri ty b en efi t s recei v eddu ri n g th e t ax ab l e y ear i rres p ect i v e o f an y I.R.C. s ec. 8 6 (e) el ect i o n . Hel d , fu rt h er, R’ s d et erm i n at io ni s s u s t ai n ed
.

W al t er Ed wardAfi el d , fo r p et i t i o n er. Hu i wen A. Xi an dJ o h n W . Sh effi el dIII, fo r res p on d en t
.

OPINION GERBER, J u d g e: Res p on d en td et erm i n eda $ 4 ,4 6 0 i n co m e t ax d efi ci en cy fo r p et i t i o n er’ s 2 01 4 t ax ab l e y ear. Th i s cas e was s ub m i t t edfu l ly s t i p u l at ed p u rs u an t t o Ru l e 1 2 2
. 1 Th e s em i n al l eg al i s s u e, o n e o f fi rs ti m p res s i o n , co n cern s wh et h er, fo r p u rp o ses o f d et erm i n i n g p et i t i o n er’ s el i g i b i l i ty fo r a p rem i u m

t ax cred i t(PTC), s ect i o n 3 6 B requ i res th e i n cl us i o no f So ci al Secu ri ty b en efi t s i n p et i t i o n er’ s co m

pu t at i on o f M o d i fi edAd

j u s tedGro s s In co m e (M A GI) i ns p i t e o f a
s ect i on 8 6 (e) el ect i o n . Th at is , we co n si d er wh et h er p et i t i o n er m u s t i n cl u d e i n h i s

1 Un l es s o th erwi s e i nd i cat ed , al l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re, an dal l s ect i on referen ces are t o t h e In t ern al Rev en u e Co d e i n effect fo r t h e y ear ati ss u e. Al l am o un t s are ro u n dedt o th e n eares td o l l ar.- 3
-

2 0 1 4 M AGI al l th e So ci al Secu ri ty b en efi t s recei v ed i n2 0 1 4 , i n cl u d i n g l u m p -s u m
am ou n t s rel at i n g t o 2 0 1 3 fo r wh i ch p et i t i o n er fi l eda s ect i on 8 6 (e) el ect i o n . Back gro u n d Th e fo l l o w i n g fact s are d eri vedfro m th e jo i nts t ip u lat i o no f fact s an d at t ach edex h i b it s . Pet it i o n er, wh i l e res i d i n g i n t h e St at e o f Geo rg i a, t i m el y fi l ed h i s p et i t i o n wi th the Co u rt
. In 2 0 1 4 p et i t i o n er recei v ed$ 2 6,1 8 0 o f So ci al Secu ri ty b en efi t s , o f wh i ch $ 1 1 ,9 0 2 was at tri b u t ab l e t o a l u m p -s u m p aym en trel at i n g t o 2 0 1 3 an d $ 1 4 ,2 7 8 was at tri b u t ab l e t o 2 01 4 So ci al Secu ri ty b en efi t s . Duri n g 2 0 1 4 p et i t i o n er en ro l l edi n a h eal th i n s u ran ce p l anth ro u gh th e h eal th i n s u ran ce m ark etp l ace. Fro m M arch th ro u g h Decem

b er 2 0 1 4 p et i ti o n er recei v edm o n thl y ad v an ce p aym en t s o f t h e PTC (APTC) o f $ 4 4 6 t o co v er a p o rt i o no f th e co s t o f t h e m o n th ly h eal th i n su ran ce p rem i u m s. Pet i t i on er recei v eda t o t al o f $ 4 ,4 6 0 i nAPTCs du ri n g 2 0 1 4
. Pet i t i o ner t i m el y

fi l edh i s 2 0 14 Fo rm

1 04 0 , U.S. In d i vi du al In co m e Tax Retu rn , o n wh i ch h e rep o rt ed$ 2 4 ,4 50 o f wag es an d$ 7 , 5 09 o f t ax ab l e So ci al Secu ri ty b en efi t s. He d i dn otrep o rtan y ex ces s APTCs o nh i s 2 0 1 4 Fo rm 1 0 4 0
an d d i d n o tfi l e th e req u i redFo rm 8 96 2 , Prem i u m

Tax Cred i t(PTC). Res p o n d en t , i n a n o t i ce o f d efi ci en cy d at edNo vem

b er 6 , 2 0 15 , d et erm i n ed th atp et i t i o n er m

u s trep ay $ 4,4 6 0 o f ex ces s APTCs . OnM arch 1 0 , 2 0 1 6 ,- 4
-

p et i t i o n er m ad e a s ect i o n 8 6 (e) el ect i o no n an am en d edFo rm 1 0 4 0A, U.S. In d i v i du al In co m e Tax Retu rn . Onh is 2 0 1 4 am en d edFo rm 1 0 4 0 A, h e rep o rt ed $ 3 1 ,1 3 7 o f ad

ju s t edg ro s s i nco m e, co n s i s t i n g o f $ 2 4 ,4 5 0 o f wag es an d $ 6 ,6 8 7 o f t ax ab l e So ci al Secu ri ty

b en efi t s . Onh is Fo rm

8 9 6 2, h e rep o rt edM AGI o f $ 3 8 ,7 2 8 , wh ich i ncl u d edh i s So ci al Secu ri ty b en efi t s rel at i n g t o 2 0 1 4 an da p o rt i o n rel at i n g t o 2 0 1 3
. Pet it i o n er al s o rep o rt edan ex ces s APTC rep aym en t o f $ 1 ,2 5 0 o n h i s am en d edFo rm

1 0 4 0 A an dFo rm

8 9 6 2. Di s cu ss i o n As a g en eral ru l e, the Co m m i s s i on er’ s d et erm i nat i o n s i na n o t i ce o f d efi ci en cy

are p res u m edco rrect , an dth e t ax p ay er b ears th e b u rd en o f s h o wi n g th at th o s e d et erm i n at i o n s are erro n eo u s . Ru l e 1 4 2 (a); INDOPCO, In c. v . Co m m i s s i o n er, 5 0 3 U.S. 7 9 , 8 4 (1 9 9 2 ); W el ch v . Hel v eri n g, 2 9 0 U.S. 1 1 1 , 1 1 5 (1 9 3 3). Acco rd in g l y , p et it i o n er b ears th e b u rd en o f s ho wi n g h e was en t i t l edt o a PTC fo r 2 0 1 4
. 2 Co n gres s en act ed th e Pat i en t Pro t ect io nan dAffo rd ab l e Care Act (ACA), Pub . L. 1 1 1 -1 4 8 , 1 2 4 St at . 1 19 (2 0 1 0 ), t o “ im pro v e acces s t o an dthe d el i v ery o f h eal th care s erv i ces fo r al l i n d i v i du al s , p art i cu l arl y l o w i n co m e, u nd ers erv ed ,

2 Th ere i s n o d i s p u t e b et ween th e p art i es co n cern i ng th e b u rd en o f p ro o f i n th i s cas e, an d t h e fact s were ag reedt o an ds ubm i t t edt o th e Co u rtb y th e p art i es .- 5
-

u n i n s u red , m i n o ri ty , h eal th d i s p ari ty , an d ru ral p o p u l at i o n s ”. Id . s ec. 5 0 01 , 1 2 4 St at . at 5 88 . Sect io n 3 6 B, a p ro v i s i o nen act edas ACA s ecs . 1 4 0 1 an d 1 0 1 0 5 , 1 2 4 St at . at 2 13 , 9 0 6 , p erm i t s cert ai n s p eci fi ed t ax p ay ers t o recei v e a s ub s i dy , redu ci n g th e co s to f h eal th i n s u ran ce p u rch as ed th ro u g h a h eal th i n s u ran ce ex ch an g e, i n th e fo rm o f a Fed eral i nco m e t ax cred itequ al t o th e PTC am o u ntfo r t h e t ax ab l e y ear. Sec. 3 6 B(a), (b ), an d (c); s ee M cGu i re v . Co m m i ss i o ner, 1 4 9 T.C. 2 5 4 , 2 5 9-2 6 0 (2 0 1 7) (p ro v i d in g a fu l l d is cu s s i o no f el ig i b i l i ty req ui rem en t s ). Th e PTC i s g en eral ly

av ai l ab le t o t ax p ay ers wi th a h o u s eh o l di n co m e o f at l eas t 10 0 % b u tn o tm o re t h an 4 0 0 % o f t h e Fed eral p o v ert y l i n e. Sec. 3 6B(c)(1 );
s ec. 1 .3 6 B-2 (b )(1 ), In co m e Tax Reg s . Ho u s eh o ldi nco m e i s th e s u m o f t h e t ax p ay er’ s M AGI p lu s th e M AGI o f fam i l y m em b ers : (1 ) fo r wh o m

th e t ax p ay er p ro p erl y cl ai m s d edu ct i on s fo r p ers o n al ex em p ti o ns an d(2 ) wh o were req ui redt o fi le a Fed eral i n co m e t ax retu rn u n d er s ect i on 1 . Sec. 3 6 B(d )(2 ). Th e Fed eral p o v ert y l in e i s d efi nedb y

th e Offi ce o f M an ag em en t an dBu d g etan di s up dat edb y th e Secret ary

o f Heal th an dHu m anServ i ces . Sec. 3 6 B(d )(3 ); Bal an cedBu d g et Acto f 1 9 9 7, Pub
. L. No . 1 0 5 -3 3 , s ec. 4 9 0 1 (a), 1 1 1 St at
. at5 7 0 (co d i fi edat4 2 U.S.C. s ec. 1 3 97

jj(c)(5 ) (2 0 1 8 )); Co m

m un i ty Op p o rtun i ti es , Acco u n t ab i l it y , an d Trai ni n g an dEdu cat io nal Serv i ces Acto f 1 9 9 8, Pub
. L. No . 1 0 5 -2 8 5 , s ec. 2 0 1 , 1 1 2 St at . at2 7 2 9 (co di fi edat 4 2 U.S.C. s ec. 9 9 0 2 (2 ) (2 0 1 8 )). APTCs are p ai d- 6
-

d i rect l y t o an i n s u ran ce p ro v id er du ri n g t h e y ear, an dt ax p ay ers are req u i redt o
reco n ci l e an y

APTCs recei v ed wi th th e el i g i bl e cred itam o u n t o nFo rm 8 9 6 2 , wh i ch i s fi led w it h t hei r Fed eral i n co m e t ax retu rn s . Sec. 3 6 B(f); ACA s ec. 1 4 1 2 , 1 2 4 St at . at2 3 1 (co d ifi edat4 2 U.S.C. s ec. 1 80 8 2 (2 0 12 )). I. M o d i fi edAd

ju s t edGro s s In co m e Th e p art i es ’ d i s p u t e co n cern s wh et h er p et i ti o n er i s en t i t l edt o an y p arto f t h e PTC. Befo re we are ab l e t o d eci d e t h e am o un to f an y cred i t, we m

u s t fi rs td eci d e wh et h er p et i ti o n er i s req u i redt o i n cl u d e i nM A GI an y o f th e So ci al Secu ri ty b en efi t s h e recei v ed du ri n g 2 01 4 , i n cl u d i ng th e n o n t ax ab l e am o u nt s rel at i n g t o 2 0 1 3 , ev en tho u g h h e m ad e a s ect i o n 8 6 (e) el ect io nt o ex cl ud e i tfro m h i s g ro s s i n co m e. Sect io n 3 6 B d efi nes M AGI, i nrel ev an tp art , as fo l l ows : SEC. 3 6 B(d ). Term s Rel at i n g t o In co m e an d Fam i l i es .--Fo r p u rp o s es o f thi s s ect i o n --

* * * * * * * (2 ) Ho u s eh o l dIn co m e.--
* * * * * * *- 7
- (B) M o d i fi edad

ju st edg ro ss i n co m e.--Th e t erm “ m od i fi edad

ju st edg ro ss i n co m e” m ean s ad j u s t edg ro s s i n co m e i n creas edb y --
* * * * * * *

(i i i ) an am o u ntequ al t o the p o rt i o no f t h e t ax pay er’ s s o ci al s ecu ri ty b en efi t s (as d efi n edi n s ect i o n 8 6 (d )) wh i ch i s n o ti n cl u d edi ng ro ss i n co m e u n d er s ect i o n 8 6 fo r t he t ax ab l e y ear. See al s o s ec. 1 .3 6 B-1 (e)(2 ), In co m e Tax Reg s . Th e p art i es ag ree t h atp et i t i o n er’ s 2 0 1 4 ad ju s t edg ro s s i n co m e i s $ 3 1 ,1 3 7 (i ncl ud i ng o n l y

$ 6 ,6 87 o f t ax ab l e So ci al Secu ri ty b en efi t s as a res u l to f a s ect i o n 8 6 (e) el ect i o n ) an dth ath e recei v ed$ 2 6 , 1 80 o f t o t al So ci al Secu ri ty b en efi t s i n 2 0 1 4 . Pet i t i o n er co n t en d s , rel y i n g p ri m ari l y o nth e i n t en d edp u rp o s e o f t he ACA, i t s l eg i s l at i v e h i s t ory , an dp ub l i c p o l i cy arg u m en ts , thath i s s ect i o n8 6 (e) el ect i o n
s h o u ldres u l ti n th e ex cl u si o n fro m h i s 2 01 4 M AGI al l the So ci al Secu ri ty b en efi t s at tri b u t ab l e t o 2 01 3 o r, al t ern at i v el y , th e So ci al Secu ri ty b en efi t s at tri b u t ab l e t o 2 0 1 3 ex cep tth e p ort io n o f h i s 2 0 1 3 b en efi t s i n cl u dedi nh i s 2 0 1 4 g ro s s i nco m e. Res po n d en tco n t en d s , h owev er, t h ats ect i o n 3 6 B i s cl ear an dth atp et i t i o n er’ s
s ect i on 8 6 (e) el ect i o n h as n o effect o n t h e co m pu t at i o no f h i s 2 0 1 4 M AGI. Res po n d en tth erefo re co n ten d s th atp et i t i o n er m u s ti n cl u d e i n h i s 2 01 4 M AGI al l
o f t h e So ci al Secu ri ty

b en efi t s recei v edi n 2 0 1 4 (i .e., $ 6,6 8 7 o f t ax ab l e an d- 8
-

$ 1 9 ,4 9 3 o f n o nt ax ab le So ci al Secu ri ty b en efi t s --t h e en t i re $ 2 6,1 8 0 ) reg ard l es s o f th e y ear t o wh i ch th e b en efi t s were at tri b u t ab l e. To p ro p erl y

co n s i d er t he p art i es ’ p o s it i on s , we fi rs tm u s t an al y ze “ wh et h er th e l an g u ag e ati s s u e h as a p lai n an du n am b ig u o u s m ean i n g”. Barn h artv . Si g m o n Co al Co ., 5 3 4 U.S. 4 38 , 4 5 0 (2 0 0 2 ) (qu o t i n g Ro b i n s o nv . Sh el l Oi l Co ., 5 1 9 U.S. 3 3 7 , 3 4 0 (1 9 9 7)); s ee Bed Ro c Lt d . v . Un i tedSt at es , 5 4 1 U.S. 1 7 6 , 1 8 3 (2 0 0 4 ). W e ap p l y th e p l ai n m ean i n g o f t h e t ex t u nl es s th e m ean i n g i s “ i n es cap ab l y
am bi g uo u s ”, Garci a v . Un i tedSt at es , 4 69 U.S. 7 0 , 7 6 n .3 (1 9 8 4 ) (J ack s o n , J ., co n cu rri n g ) (quo t i n g Sch weg m an nBro s . v . Cal v ertDi st i l l ers Co rp ., 3 4 1 U.S. 3 8 4 , 3 9 5 (1 95 1 )), b ecau s e “ [w] h ere l eg is l at i v e ‘ wi ll h as b een ex p res sedi nreas o n ab l y p l ai n t erm s , thatl an g u ag e m u sto rd in ari l y

b e reg ard edas co n cl u s i v e’ ”, Al len v . Co m m i s s i o n er, 1 1 8 T.C. 1 , 7 (2 0 0 2 ) (qu o t in g Neg on s ot tv . Sam u el s , 5 07 U.S. 9 9 , 1 0 4 (1 99 3 )); s ee Ven tu re Fu n di n g , Lt d . v . Co m m i s s i o ner, 1 1 0 T.C. 2 3 6 , 2 4 1 -2 4 2 (1 9 9 8), aff’ d , 1 9 8 F.3 d2 4 8 (6 th Ci r. 1 9 9 9). Wh en co ns tru i n g a s t atut e, h o wev er,

“ ‘ [i ] ti s o u r du ty

“ t o g i v e effect , i f p os s ib l e, t o ev ery cl au s e an dwo rd ”’ s o as t o
av o idren d eri n g an y

p arto f t h e s t atu t e m ean i ng l es s s u rp l u s ag e.” 1 5 W . 1 7t h St
. LLC v . Co m

m i s s i o n er, 1 47 T.C. 5 5 7 , 5 8 6 (2 0 1 6) (q uo t i n g Un i t ed St at es v . M en as ch e, 3 4 8 U.S. 5 2 8 , 5 3 8 -5 3 9 (1 9 5 5 ), an d ci ti ng M arb u ry v . M ad i so n , 5 U.S. (1 Cran ch ) 1 3 7, 1 71 (1 8 0 3 )).- 9
-

A. No tIn cl u d edi n Gro s s In co m e W e b eg i n b y

an al y zi ng th e s t atu t o ry

p h ras e “ n o t i n cl ud edi ng ro s s i n co m e
u n d er s ect i o n 8 6 fo r t h e t ax ab l e y ear” wi th i nth e co n t ex t o f s ect i o n 3 6 B(d )(2 )(B)(i i i ). Sect io n 8 6 (d ) d efi n es “ so ci al s ecu ri ty b en efi t [s ] ” as “ an y

am o u n trecei v ed b y th e t ax p ay er b y

reas o n o f en t i t lem en t t o --(A) a m o nt h l y b en efi tu n d er t i t l e II o f th e So ci al Secu ri ty

Act , o r (B) a t ier 1 rai l ro adret i rem en tb en efi t .” Wh et h er an d t o wh atex t en tSo ci al Secu ri ty b en efi t s are i n cl u d edi n a t ax p ay er’ s g ro s s i n co m e (i
. e., th e t ax ab l e am o u n t o f So ci al Secu ri ty b en efi t s recei v ed ) i s cal cu lat ed p u rs u an t t o a s tatu t o ry

fo rm u l a s etfo rt h i ns ect i o n8 6 . Sec. 8 6 (a)-(d ); s ee M cAd am s v . Co m

m i s s i o n er, 1 1 8 T.C. 3 7 3 , 3 7 5-3 7 6 (2 0 0 2 ). A t ax p ay er, h o wev er,
m ay m ak e a s ect i o n 8 6 (e) el ect i o n i f t h e t ax p ay er recei v es a l u m p -s u m So ci al Secu ri ty b en efi t , wh i ch i s at tri b u t ab l e t o a p ri o r y ear. W i th o u t a s ect io n 8 6 (e) el ect i o n , a t ax p ay er cal cu lat es h is M AGI fo r p u rp os es o f s ect io n 3 6 B b y i n creas i n g h is ad

ju s t edg ro ss i n co m e b y

th e p o rt i o n o f So ci al Secu ri ty

b en efi t s recei v edi n a t ax ab l e y ear t h ati s n o ti n cl u d edi ng ro s s i n co m e. See s ec. 3 6B(d )(2 )(B); s ec. 1 .3 6B-1 (e)(2 )(i i i ), In co m e Tax Reg s . See g en eral l y Gran t v . Co m

m i s s i on er, T.C. M em o . 2 0 1 8 -1 1 9
. If p et it i on er h adn o t- 1 0 -

m ad e a s ect i on 8 6 (e) el ect i on , h i s M AGI wo u l db e d et erm i n ed b y i n creas i n g h i s ad ju s t edg ro ss i nco m e b y

$ 19 ,4 9 3 , th e n o n t ax ab l e am ou n t
. Pet i t i o ner, h o wev er, m ad e a s ect i o n8 6 (e) el ect i o n , an dwe m u s t n o w d et erm i n e t h e effect , i f an y , a s ect i o n8 6 (e) el ect i o n h as o np et i ti o ner’ s M AGI. In g en eral a s ect i o n 86 (e) el ect i on affect s th e am o u n t o f So ci al Secu ri ty b en efi t s i n cl u d edi n g ro s s i n co m e fo r t h e y ear o f recei pt . Th e am o u n t i n cl ud ed i ng ro s s i n co m e fo r t h e y ear o f recei p t , b y reas o n o f t h e p o rt i o nat tri b u t ab l e t o a p ri o r y ear, wi l l n o tex ceedth e i n creas e i n g ro s s i n co m e fo r th e p ri o r y ear t h atwo u l dh av e
res u l ted i f t h e p o rt i o n at tri b u t ab l e t o th e p ri o r y ear h adb een recei v ed i nth aty ear. See s ec. 8 6 (e)(1 ); s ee al s o Ro b b i n s v . Co m m is s i o n er, T.C. M em o . 2 0 1 7-2 4 7 ; Po l l ardv . Co m

m i s s i on er, T.C. M em o . 2 0 11 -1 3 2
. B. Un der Sect i o n 8 6 fo r th e Tax ab l e Year Th e p l ai n t ex to f s ect i o n 3 6 B req u i res th ata t ax p ay er i n cl u d e, i nco m p u t i n g h i s M AGI, So ci al Secu ri ty b en efi t s “ wh i ch * * * [were] n oti ncl u d edi ng ro s s i n co m e un d er s ect i o n 8 6 fo r th e t ax ab l e y ear.” Sec. 3 6 B(d )(2 )(B)(i ii ). Sect i o n 3 6 B an d i t s acco m

p an y i n g reg ul at i o n s d o n o tex p l i ci tl y ad dres s th e m ech an i cs o r
m ean i n g o f a s ect i o n 8 6 (e) el ect i o n . Pet i t i o ner co n ten d s th ats ect i o n3 6B i s am b i g uo u s b ecau se o f t h e co nfl u en ce
o f t h e p h ras es “ fo r t h e t ax ab l e y ear” an d “ u n der s ect i o n 8 6 ”. Pet i t i o n er arg u es th at- 1 1 -

“ fo r th e t ax ab l e y ear” referen ces h i s t ax ab l e y ear as d efi n edi ns ect io n4 41 (i .e., h i s cal en d ar y ear) an d , th erefo re, h i s M AGI i n cl u d es o n l y So ci al Secu ri ty b en efi t s at tri b u t ab l e t o 2 01 4 , n o ttho s e at tri b u t ab le t o 2 0 1 3. Pet i t i o n er arg u es thatth e p h ras e “ u n d er s ect i o n 8 6 ” req u i res th at s ect i o n3 6 B b e read t o i n cl u d e t h e en t i ret y
o f s ect i o n 8 6 , i n cl u d i n g s ect i o n 8 6 (e). Th e y ear o f recei p t , as o p p o s edt o th e y ear t o wh i ch th e So ci al Secu ri ty b en efi t s are at tri b u tab l e, i s th e s i g n i fi can td efi n i ti v e fact o r. See s ecs . 4 41 , 4 5 1 . It i s an es t ab li s h edl eg al p ri n ci pl e th ata cas h m et h o di n di v idu al g en eral l y rep o rt s i n co m e i n th e y ear i ti s recei ved , ev en i f th e b en efi t s are at tri b ut ab l e t o a p ri o r y ear. See s ec. 4 5 1 (a); s ec. 1 .4 5 1 -1 (a), In co m e Tax Reg s . Inthatreg ardp et i t i o n er ag rees th atth e So ci al Secu ri ty b en efi t s at tri b u t ab l e t o 2 0 1 3 are “ t ech n i cal l y t ax ed ” i n the y ear recei ved . Acco rd in g l y , th e p h ras e “ fo r t h e t ax ab le y ear” i s n ot
am bi g uo u s . Pet i t i o ner arg u es , h o wev er, t h at“ [a] l th o u gh th e l u m p-s u m p aym en t[rel at i n g t o 2 0 1 3] i s t ech n i cal ly

t ax edi n th e y ear t h e l u m p -s u m p aym en ti s recei v ed , a p o rt i on o f i ti s i n cl ud i b l e i n i n co m e o nl y b ecau s e i ti s at tri b u t ab le t o t ax o w edi n a p ri o r t ax ab l e y ear u nd er [s ] ect i o n8 6 .” Th ati s , th e So ci al Secu ri ty b en efi t s recei v edi n 2 0 1 4 b u t at tri b u t ab l e t o 2 0 1 3 are n o tSo ci al Secu ri ty b en efi t s recei v ed

“ u n d er s ect i o n 8 6 fo r t h e [2 0 14 ] t ax ab le y ear”.- 1 2 -

Al th ou g h s ect io n 3 6B an di t s acco m p an y i ng reg u l at i o n s are s i len twi th reg ardt o th e effect , i f an y , o n M AGI i f a t ax pay er m ak es a s ect i o n 8 6 (e) el ect i o n , s ect i on 3 6 B an d th e u n d erl y i ng reg u l at i o n s p ro v i d e t h at So ci al Secu ri ty b en efi t s recei v edi n a t ax ab le y ear t h atwere “ n o ti ncl u d edi ng ro s s i n co m e u n d er s ect i o n 8 6 fo r th e t ax ab l e y ear” m u s tb e ad dedt o a t ax p ay er’ s M A GI. Sec. 3 6 B(d )(2 )(B)(i i i ); s ee s ec. 1 .3 6 B-1 (e)(2 ), In co m e Tax Reg s . Pet i t i o ner, h o wev er,
m i s i n t erp ret s th e ap p l i cat i o n o f s ect i o n 3 6 B wh en a s ect io n 8 6 (e) el ect i o nh as b een
m ad e. A s ect i o n 8 6 (e) el ect i o n d et erm i n es th e am o u n t i n cl ud edi ng ro s s i n co m e fo r t h e y ear o f recei p t
. Pet it i on er’ s s ect i o n8 6 (e) el ect i o n s i m p l y d et erm i ned wh i ch am o u n to f t h e l u m p-s u m p aym en tat tri b ut ab l e t o 2 0 1 3 s h o u l db e i n cl u d edi n h i s g ro s s i n co m e fo r 2 0 14 . W e fi n dth atthe p h ras e “ un d er s ect i o n 8 6 ” i s n o t
am bi g uo u s an dth e cro s s -referen ce req u i res th e co ns i d erat i o no f s ect io n8 6 i ni t s
en t i ret y , i n cl u di ng s ect i on 8 6 (e). Fo r t h e afo rem en t i o n edreas o n s , we h o l dth atth e t ex to f th e s t atu te i s n o t
am bi g uo u s an dth atp et i ti o n er m u s ti n cl ud e i nh is M AGI al l o f t h e So ci al Secu ri ty b en efi t s recei v edi n 2 0 1 4 , i rres p ect i v e o f th e s ect i o n8 6 (e) el ect i o n . As a res u l t , p et i t i o n er’ s ad

j u s t ed g ro s s i n co m e i s i n creas edb y th e am o u n to f So ci al Secu ri ty b en efi t s n o ti ncl u d edi n g ro s s i n co m e an d , as ex pl ai n edb el o w, h i s M AGI ex ceed s th e es t ab l i s h edth res h o l d fo r PTC el i g i b i li ty b y a rel at i v el y

s m al l am o u nt . W e are- 1 3 -

co g ni zan tth at p et i t io n er’ s M AGI ex ceed edth e t h res h o l d b y a rel at i v el y

s m al l
am ou n t , b u twe are b o un db y the s t atu t e as wri t t en . See M i ch ael s v . Co m m i s s i o n er, 8 7 T.C. 1 41 2 , 1 4 1 7 (1 9 86 ). As s u m i ng arg u en d o th ats ect i on 3 6 B an di t s acco m p an y i n g reg u l at i o n s were
am bi g uo u s , th e l eg i s lat i v e h i s t o ry s up p o rt s o u r co ncl u s i o nan dh o l d in g th ata t ax p ay er m

u s t i n cl ud e al l So ci al Secu ri ty b en efi t s recei v ed du ri n g a t ax ab le y ear i n a t ax p ay er’ s M AGI fo r t h e t ax ab l e y ear i n ques t i o n . Wh en th e ACA was i n i t i al l y
en act ed , M AGI d i d n o treq u i re t h e i n cl us i o no f n o n t ax ab l e So ci al Secu ri ty b en efi t s . See ACA s ec. 1 4 01 (a), 1 2 4 St at . at2 1 7 -2 1 8 . Th e d efi n i t i o n o f M AGI, h o wev er, was am en d edt o s p eci fi cal l y i n cl u d e t h e fu l l am o u n to f a t ax p ay er’ s So ci al Secu ri ty

b en efi t s . See Acto f No v . 2 1 , 2 0 11 , Pub. L. No
. 1 1 2 -5 6 , s ec. 4 0 1 (a), 1 2 5 St at . at7 3 4; s ee al s o H.R. 2 5 7 6, 1 1 2 th Co n g . (2 0 1 1 ); H.R. Rep t . No
. 1 1 2 -2 5 4 , at2 (2 01 1 ). Pet i t i o ner co n ten d s th atd en y i n g h i m th e PTC b ecau s e o f i n co m e at tri b u t ab l e t o a p ri o r y ear l ead s t o an ab s u rdres u l t , wh ich i s co n trary t o th e i n t en d edp u rp o s e o f th e ACA, an dth ath e i s wi th in th e cl as s o f p ers o n s thatth e
s t atu te was i n ten d edt o as s i s t. W e, h o wev er, d o n o tfi n dth atthe i n t erp ret at i o n o f th e s t atu t e l ead s t o an ab s u rdres u l ti n thi s cas e. M o reo v er, we can n o ti g n ore t h e l aw t o ach i ev e an equ i t ab le en d. See Co m m is s i o n er v . M cCo y , 4 8 4 U.S. 3 , 7- 1 4 -

(1 9 8 7); M cGu i re v . Co m m i s si o n er, 1 4 9 T.C. at2 6 2 . Wh i le we are s y m p at het i c t o p et i t i o n er’ s s i tu at io n , h i s M AGI ex ceed edel ig ib l e l ev el s , an d we are b o u n db y th e
s t atu te as wri t t en . II. El i g i b i l i ty

an dRep aym en to f t h e PTC Fo r t h e p u rp o se o f d et erm i n i ng PTC el i g i b i l it y , a t ax p ay er el i gi b l e fo r PTCs i s g en eral l y

a t ax p ay er wh o s e h o u seh o l di n co m e i s atl eas t1 00 % b u tn o tm o re th an 4 00 % o f t h e Fed eral p o vert y l i n e fo r t h e t ax p ay er’ s fam i l y s i ze fo r th e t ax ab l e y ear. Sec. 3 6 B(c)(1 ); s ec. 1 .3 6 B-2 (b )(1 ), In co m e Tax Reg s . Ho us eh o l di n co m e i s d efi n edas th e t ax pay er’ s M AGI p l u s th e M A GI o f cert ai nfam i l y m em b ers . Sec. 3 6 B(d )(2 ). Pet i t i o ner’ s M AGI i s h i s ad ju s t edg ro s s i n co m e i n creas edb y the t o t al
am ou n to f So ci al Secu ri ty b en efi ts n o t i n cl u d edi nh i s g ro s s i n co m e, $ 5 0 ,6 3 0
. Th e p art i es s t i p u l at ed , an dwe fi n d , th at$ 5 0 ,6 3 0 i s 4 4 1 % o f t h e Fed eral p o v ert y l in e fo r 2 0 14 . See 7 8 Fed . Reg . 5 1 8 2 -5 18 3 (J an . 2 4 , 2 0 1 3 ). Becau s e p et i t i o n er’ s h o us eh o l di n co m e ex ceed ed4 0 0 % o f th e 2 01 4 Fed eral p o v ert y l i n e, h e d i dn o t qu al i fy

fo r th e PTC; an dthe fu ll am o u n t o f t h e APTCs h e recei v eddu ri n g 2 0 1 4 m u stb e i n cl u d edas a t ax l i ab i l i ty o nh is t ax retu rn . Sec. 3 6 B(c)(1 )(A), (f)(2 )(A); s ec. 1 .3 6B-4 (a)(4 ), Ex am p l e (5 ), In co m e Tax Reg s .; s ee M cGu i re v . Co m m i s s i o n er, 1 4 9 T.C. at2 6 1-2 6 2 . Acco rd i n g l y , we s us t ai n res p on d en t ’ s d et erm i n at i o n .- 1 5 -

To refl ectthe fo reg o i n g , Deci s i o n wi ll b e en t eredfo r
res p o nd en t
.