TAX COURT OPINION

Case: James Eugene Mace, III
Docket Number: 13763-14S
Judge: Guy
Opinion Type: bench
Filed: 04/27/2015
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 JAMES EUGENE MACE, III, Petitioner, v. ) ) ) ) Docket No. 13763-14S. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER 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 abovecaptioned case before Special Trial Judge Daniel A. Guy, Jr., at Boston, Massachusetts, on April 13, 2015, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, an appropriate decision will be entered. (Signed) Daniel A. Guy, Jr. Special Trial Judge Dated: Washington, D.C. April 27, 2015 SERVED Apr 28 2015 Capital Reporting Company 3 1 2 Bench Opinion by Special Trial Judge Daniel A. Guy, Jr. 3 April 15, 2015 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 James Eugene Mace, III v. Commissioner Docket No. 13763-14S THE COURT: The 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 proceeding for the review of an income tax deficiency is a small tax case conducted pursuant to the provisions of Section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. 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. 22 Hereinafter in this bench opinion, section references 23 24 25 are to the Internal Revenue Code of 1986, as amended, in effect for 2011. At the time the petition was filed, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 petitioner resided in Massachusetts. Petitioner appeared at trial pro se. Sheida Lahabi appeared on behalf of respondent. Petitioner concedes that he failed to report taxable interest income of $10 for the taxable year 2011 (year in issue). The only issue remaining for decision is whether petitioner was obliged to include $4,341 of social security benefits in taxable income for the year in issue. Some of the facts have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by this reference. Petitioner testified that he worked during the first quarter of 2011 and that he earned $4,129 during that period. Petitioner further testified that he retired on April 1, 2011. There is no dispute that petitioner received social security benefits of $15,000 during 2011. Petitioner filed a timely federal income tax return for 2011, reporting wages of $34,024 and adjusted gross income of $26,171 (an amount that petitioner now concedes is $26,181). Petitioner did not include any of the social security benefits that he received in 2011 in taxable income. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 Respondent examined petitioner's tax return and determined an income tax deficiency of $846. 3 Specifically, respondent determined in pertinent part 5 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that petitioner was required to include $4,341 of social security benefits in taxable income. The amount of social security.benefits to be included in gross income is determined by a statutory formula found in Section 86. See Sec. 86(a)-(d). Section 86 requires inclusion of a portion of the payments if the sum of the taxpayer's adjusted gross income (with certain modifications not relevant here) and one-half of the social security benefits received exceeds a specified "base amount." Jelle v. Commissioner, 116 T.C. 63, 71 (2001). This base amount is $25,000 for taxpayer like petitioner who filed an ïndividual or "single" return. See Sec. 86·(c)(1) (A). Because petitioner had adjusted gross income of $26,181 and received social security benefits totaling $15,000 during the 2011 taxable year, the base amount threshold has been exceeded. We therefore sustain respondent's determination that a portion of the $15,000 petitioner received in 2011 as social .security benefits must be included in the petitioner's gross income for that taxable year. Petitioner contends that in computing any 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 .tax due in respect of his social security benefits under Section 86, his adjusted gross income should be limited to $4,129--the amount that he contends he earned before he retired on April 1, 2011. 5 Otherwise, he believes that he will be subject to 6 7 8 double taxation. In Reimels v. Commissioner, 123 T.C. 245, 247 (2004), aff'd, 436 F. 3d 344 (2d Cir. 2006), the 9 Court noted that Congress enacted Section 86 in 1983 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to shore up the solvency of the Social Security Trust Fund and to treat social security benefits more on par with other types of retirement income. Moreover, we have recognized that by taxing only a portion of social security benefits, Congress intended to allow taxpayers some cost recovery for their contributions to the Social Security Trust system. See Roberts v. Commissioner, T.C. Memo. 1998-172, aff'd without published opinion, 182 F. 3d 927 (9th Cir. 1999). Petitioner seems to question both the operation and fairness of Section 86. As to the former matter, we conclude that respondent's computation of petitioner's tax liability for the year in issue comports with the plain language of Section 86. Petitioner has not identified any legal authority that might support·his theory for computing 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 adjusted gross income under Section 86, and we are aware of none. Moreover, as we stated in Roberts, the Court is not the proper forum to question the fairness of the policy considerations that motivated Congress to enact Section 86. In short, the Court is not empowered to create an exception to Section 86 by judicial fiat, and we are obliged to apply the law as 8 written. See, e.g., Iselin v. United States, 270 9 U.S. 245, 250-251 (1926). Consistent with the preceding discussion, respondent's determinations in this case are sustained. This concludes the Court's oral findings of fact and opinion. (Whereupon, at 10:31 a.m., the above- entitled matter was concluded.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com