TAX COURT OPINION

Case: Kawika H. Smith & Michele M. Smith
Docket Number: 3189-12S
Judge: Gale
Opinion Type: bench
Filed: 06/25/2013
Pages: 5

UNITED STATES TAX COURT WASHINGTON, DC 20217 ALS KAWIKA H. & MICHELE M. SMITH, ) ) ) ) ) Docket No. ) COMMISSIONER OF INTERNAL REVENUE, ) ) ) Respondent Petitioners, v. 3189-12S. OR D E R 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 petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph H. Gale at Honolulu, Hawaii, on June 12, 2013, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. Decision will be entered for respondent in accordance with the oral findings of fact and opinion. (Signed) Joseph H. Gale Judge Dated: Washington, D.C. June 25, 2013 SERVED Jun 26 2013 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Bench Opinion ·by Judge Joseph H. Gale June 12, 2013 Kawika H. & Michele M. Smith v. Commissioner Docket No. 3189-12S 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 case was heard as a Small Tax Case pursuant to the provisions of section 7463 of the Internal Revenue Code in effect when the petition was filed. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. Footnote: All section references are to the Internal Revenue Code in effect for the years at issue, and all Rule references are to the Tax 20 Court Rules of Practice and Procedure. 21 22 23 24 25 Petitioner Michele M. Smith appeared on her behalf and on behalf of petitioner Kawi H. Smith. David Lau appeared on behalf of respondent. Respondent determined a deficiency in petitioners' 2009 income tax of $3,258. There are 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 two issues for decision.. First·, whether petitioners were required to include in their gross income 3 workmen's compensation benefits that offset Social 4 Security benefits. Second, whether petitioners are 5 6 7 8 9 10 11 12 13 14 15 16 17 18 entitled to an education tax credit in the amount of $707 and the American opportunity credit in the amount of $471. FINDINGS OF FACT Some of the facts have been stipulated and are so found. Petitioners resided in Hawaii at the time they filed their petition. During 2009, petitioner Kawika H. Smith received workmen's compensation benefits of $12,268 that offset Social Security benefits in that amount. Petitioners timely filed a joint income tax return for taxable year 2009 on which they claimed an education credit of $707 and an American 19 Opportunity credit of $471. They did not report 20 21 22 23 as income any workmen's compensation benefits that substituted for Social Security benefits. The Social Security Administration reported to respondent on a Social Security 24 Administration Form SSA-1099 that petitioner Kawika 25 H. Smith received Social Security benefits that 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 . were reduced by reason of the receipt of a benefit under a workmen's compensation act in the amount of $12,268 in 2009. Respondent issued petitioners a timely notice of deficiency disallowing the credits, adjusting their income to include the taxable portion of the workmen's compensation benefits ($6,518), and making computational adjustments to 9 petitioners' claims of a child tax credit, an 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 additional child tax credit, and the earned income credit. These adjustments resulted in the determination of a deficiency in petitioners' 2009 Federal income tax as noted above. OPINION Section 86(a) (1) provides for the inclusion of a portion of Social Security benefits in gross income. Section 86(d) (3) includes in the definition of Social Security benefits any benefits received under a workmen' s compensation act to the extent to which any Social Security benefit is reduced as a result of such benefits. Petitioners do not dispute the fact of their receipt of workmen's compensation benefits that were offset by reduced Social Security benefits, but they contend that because the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 benefits were workmen's compensation benefits they should not be taxed as Social Security benefits. The Internal Revenue Code, however, does not allow us to make that distinction. "The statute simply does not allow worker's compensation benefits paid by a State and that offset Social Security benefits to be excluded from the taxable amount of Social 8 Security benefits . " Moore v. Commis sioner, T . C. 9 Memo. 2012-249 at *4-5. Petitioners have failed to 10 11 12 13 14 demonstrate that the workmen's compensation benefits they received should be excluded from their gross income. Petitioners did not dispute the disallowance of the education credit or the American 15 Opportunity credit in their petition and they have adduced no evidence showing.their eligibility for the credits. Those issues are therefore deemed conceded. See Rule 34 (b) (4) . To reflect the foregoing, decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 11:00 a.m., the above- captioned matter was concluded.) 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com