TAX COURT OPINION

Case: George F. Ventura
Docket Number: 20912-09S
Judge: Colvin
Opinion Type: bench
Filed: 11/09/2010
Pages: 5

UNITED STATES TAX COURT WASHINGTON, DC 20217 Docket No. 20912-09S GEORGE F . VENTURA, Petitioner, v. 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 transcript of Francisco, California on October 7, 2010, containing his oral findings of trial. the trial of this case before Judge Haines at San the pages of the fact and opinion rendered at the conclusion of the In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Harry A. Haines Judge Dated: Washington, D.C. November 9, 2010 SERVED NOV 1 0 2010 3 Bench Opinion by Senior Judge Harry A. Haines George F. Ventura v. Commissioner Docket No. 20912-095 October 7, 2010 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. Petitioner reported on his 2007 form 1040, US individual income tax return, adjusted gross income in the amount of $40,000, consisting of payments from a thrift savings plan. Petitioner did not report any other income , for 2007. A form SSA-1099, social security benefit statement, and form W-2, wage statement, were issued to Petitioner. The form SSA-1099 reported social security benefits of $21,670.80 in 2007, consisting of, one, 7596 social security income; two, $1122 in Medicare premiums paid for Petitioner; and three, $12,952.80 in workers' compensation offset. The form W-2 reported that Petitioner had received $208.33 in wages from the United States -- or, from the United States Postal Service in 2007. On June 1, 2009, Respondent issued a notice of deficiency to Petitioner for 2007, which determined that 85 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 Heritage Reporting Corporation (202) 628-4888 4 percent of the Petitioner's social security benefits and the unreported $208.33 of compensation were includable in Petitioner's income. On September 1, 2009, Petitioner filed a petition disputing the taxability of the social security disability benefits. Petitioner did not contest the receipt of such benefits and later stipulated to the $208.33 of wage income. After concessions, the remaining issue for decision is whether Petitioner failed to report social security benefits in the amount of $21,670.80 for 2007. Petitioner is an individual who maintained his legal residence in the state of California at the time his petition was filed in this case. Gross income includes all income from whatever source derived unless otherwise excluded by the Internal Revenue Code. Sec. 61(a). Section 86 requires the inclusion in gross income of up to 85 percent of social security benefits received. Section 86(d) (1) (A) defines social security benefits to include any amount received by reason of entitlement to a monthly benefit under Title 2 of the Social Security Act. 42 USC secs. 401 through 434 (2000). Prior to 1984 certain payments made in lieu of wages to an employee who was retired were excludable from the employee's gross income, pursuant to sec. 105(d). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 15 19 20 21 22 23 24 25 Heritage Reporting Corporation (202) 628-4888 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 5 However, since 1984, social security disability benefits have been treated in the same manner as other social security benefits and are subject to tax, pursuant to section 86. Thomas v. Commissioner, T.C. Memo 2001-120; Bradley v. Commissioner, T.C. Memo 1991-578. Section 86 was added to the Internal Revenue Code by the Social Security Amendments Act of 1983, Publ. L. 98- 21, sec. 121; 97 Stat. 80. The House report states in relevant part: 'Social security benefits potentially subject to tax will include any workmen's compensation whose receipt caused a reduction in social security disability benefits. For example, if an individual were entitled to $10,000 of social security disability benefits, but received only $6000 because of the receipt of $4000 of workers', workmen's compensation benefits, then for purposes of the provisions taxing social security benefits, the individual will be considered to have received $10,000 of social security benefits.' H. Rept. 98-25 at 26 (1983); 1983 U.S.C.C.A.N. 219 at 244. Moreover, we have consistently held that reduction of social security disability benefits due to the receipt of benefits under a workmen's compensation act does not reduce the total amount of taxable social security benefits. Sec. 86(d) (3); Mikalonis v. Commissioner, T.C. Memo 2000-281; Heritage Reporting Corporation (202) 628-4888 1 Willis v. Commissioner, T.C. Memo 1997-290. 6 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 does not contest the receipt of such benefits; rather, Petitioner only contests the taxability of the workers' compensation offset. Petitioner provided letters regarding his disability claims but has provided no further evidence as to why the social security benefits are not taxable. To reflect the foregoing, the Court holds that Petitioner's social security benefits are includable in income. In reaching our holding, we have considered all arguments made, and to the extent not mentioned, we conclude that they are moot, irrelevant, or without merit. After reflecting concessions by Petitioner as to the taxable compensation, decision will be entered for Respondent. This concludes the Court's oral findings of fact and opinion. (Whereupon, at 1:53 p.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // Heritage Reporting Corporation (202) 628-4888