TAX COURT OPINION

Case: Bernice S. Pierce
Docket Number: 3480-12S
Judge: Armen
Opinion Type: bench
Filed: 11/05/2012
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 BERNICE S. PIERCE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ORDE R Docket No. 3480-12S. 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 Special Trial Judge Robert N. Armen, Jr. at Las Vegas, Nevada, on September 11, 2012, containing 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, a decision will be entered for respondent. (Signed) Robert N. Armen, Jr. Special Trial Judge Dated: Washington, D.C. November 5, 2012 SERVED NOV 5 2012 Capital Reporting Company Bernice S. Pierce 09-11-2012 1 Bench Opinion by Judge Robert N. Armen, Jr. 9/11/2012 3 2 Bernice S. Pierce Docket No.: 3480-12S 3 September 11, 2012 4 5 6 7 I. 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 8 OPINION. THE ORAL FINDINGS OF FACT AND OPINION SHALL 9 NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE. 10 11 II. This proceeding was heard as a Small Tax Case 12 pursuant to the provision of section 7463 of the 13 14 Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax Court Rules of Practice and 15 Procedure. 16 17 III. This bench opinion is made pursuant to the 18 authority granted by section 7459(b) of the Internal 19 Revenue Code of 1986, as amended, and Rule 152 of the 20 Tax Court Rules of Practice and Procedure. 21 Hereinafter in this bench opinion, and unless 22 otherwise indicated, all section numbers refer to the 23 Internal Revenue Code, as amended and in affect for the 24 taxable year in issue, and all Rule numbers refer to 25 the Tax Court Rules of Practice and Procedure. (866) 448 - DEPO www.CapitalReportingCompany.com 2012 8 O Capital Reporting Company Bernice S. Pierce 09-11-2012 IV. 4 Bernice S. Pierce (hereinafter, petitioner) appeared on her own behalf. Fred E. Green, Jr. appeared on behalf of respondent. V. Respondent determined a deficiency in 1 2 3 4 5 6 7 petitioner's Federal income tax for 2009 of $1,164. At 8 trial, however, respondent claimed a reduced deficiency 9 of $1,094. 10 11 VI. The issue for decision by the Court is 12 whether petitioner is liable for the reduced 13 deficiency. This turns on whether a portion of 14 petitioner's Social Security benefits are properly 15 includible in her taxable income. 16 17 18 19 VII. Some of the facts have been stipulated, and they are so found. Petitioner resided in the State of Nevada at 20 the time that the petition was filed with the Court. 21 22 The taxable year at issue in this case is the calendar year 2009. During that year petitioner was 23 retired. She supported herself principally from 24 pension income and Social Security benefits. She also 25 received a negligible amount of wages. (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Bernice S. Pierce 09-11-2012 5 1 Petitioner enjoys gambling. During 2009 2 petitioner received gambling winnings for which Forms 3 W-2G were issued in the total amount of $33,677. 4 However, for that year petitioner incurred gambling 5 6 7 8 losses equal to, or greater than, that amount . Petitioner timely filed an income tax return for 2009. On her return, petitioner did not report any gambling winnings or claim any gambling losses . Also, 9 petitioner did not include any portion of her Social 10 Security benefits in taxable income. Petitioner 11 12 claimed the standard deduction and ultimately reported a tax liability of $6, which she set off against 13 withholding of $99, thereby claiming (and receiving) a 14 15 refund of $93. Subsequently, petitioner submitted an amended 6 16 return to respondent. On her amended return petitioner 17 18 reported as "other income" gambling winnings of $33,677, ·Petitioner attached to her amended return a 19 Schedule A, Itemized Deductions, and included thereon, 20 inter alia, gambling losses of $33,677. Ultimately 21 petitioner reported total tax of $1,107. After 22 subtracting the $6 reported as tax on her original 23 return, petitioner reported $1,101 as "amount you owe." 24 In making the computations on her amended return, 25 petitioner included 85 percent of her Social Security (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Bernice S..Pierce 09-11-2012 6 1 benefits, or $11, 918, in taxable income. 2 3 Respondent did not process.petitioner's amended return as such, but his deficiency 4 determination generally para·lleled it. Thus, 5 respondent determined that petitioner received gambling 6 winnings of of $33,677, that $11,918 of her Social 7 Security benefits is includible in her taxable income, 8 9 10 and that she incurred Schedule A gambling losses of $33., 677 . At trial, respondent agreed to an'increase to 11 petitioner's i.temized deductions as reported by her, 12 13 thereby resulting in a reduced deficiency of $1,094. Petitioner made no claim at trial to any 14 additional deduction not already reported by her on her 15 Schedule A and allowed by respondent. Further, 16 petitioner did not take issue with any computational 17 matter. Rather, petitioner arg'ued that it was not 18 19 "fair" to tax her Socia·l Security benefits because of increases in the cost of living that have consumed more 20 and more of her benefits in recent times . Petitioner 21 also argued that she should not be liable for any 22 interest on a deficiency in tax. 23 24 VIII. Insofar as fairness is concerned, we need 25 only say that Congress defines what is fair from a tax (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Bernice S. Pierce 09-11-2012 1 point of view. And specifically insofar as Social 2 Security benefits are concerned, section 86, as enacted 3 4 by Congress, defines what portion, if any, of a taxpayer's Social-Security benefits will be taxable. 5 Through a formula, that section makes clear that at a 6 certain point as much as 85 percent of a taxpayer's 7 Social Security benefits are includible in taxable 8 9 income. In the present case, petitioner herself included 85 percent of her Social Security benefits in 10 her taxable income on her amended return, and 11 respondent's determination in the notice of deficiency 12 did the same. 13 Also noteworthy is the fact that the 14 deficiency that respondent now claims, i.e., the 15 reduced deficiency of $1,094, is slightly less than the 16 amount that petitioner herself reports as owed on her 17 18 19 20 21 22 Form 1040X, i.e., $1,101. Under these circumstances we fail to see how petitioner is in any position to complain. (cid:16)042 IX. Finally, petitioner requests that interest be "cancelled. " However, apart· from a few very limited 23 exceptions that are ·not applicable here, we lack 24 jurisdiction over interest that accrues on a tax 25 deficiency that has yet to be assessed. McCauley (866) 448 - DEPO www.CapitalReportingCompany.com 2012 Capital Reporting Company Bernice S. Pierce 09-11-2012 1 2 3 v. Commissioner, T.C. Memo. 1988-431; cf. sec. 6404 (h); Rules 280-284. Thus, as explained at trial, we ( are bound by our jurisdictional limits and cannot 8 4 adjudicate petitioner's request in the present 5 proceeding. X. In order to give effect to the foregoing, decisi.on will be entered in favor of respondent but for a reduced deficiency of $1,094. XI. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 12:05 p.m., the bench opinion were concluded.) 6 .7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 2 4 25 (866) 448 - DEPO . www.CapitalReportingCompany.com 2012 1 2 3 4 5 6 7 8 9 CERTIFICATE OF TRANSCRIBER AND PROOFREADER CASE NAME: BERNICE 5. PIERCE DOCKET NO.: 003480-12S We, the undersigned, do hereby certify that the foregoing pages, numbers 1-7, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by 10 Shannon J. Rose, on September 11, 2012, before the 11 United States Tax Court at its session in Las Vegas, 12 Nevada, in accordance with the applicable provisions of 13 14 15 16 17 18 19 20 21 22 23 24 25 the current verbatim reporting contract of the Court, and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. Shannon J. (Transcri o r) (Date) ephanie am (Proofreader) (Date) Page 8