                            T.C. Memo. 1999-128



                          UNITED STATES TAX COURT



                THOMAS J. AND ROBIN HAVENS, Petitioners v.
               COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 3584-98.                       Filed April 20, 1999.




        Thomas J. and Robin Havens, pro sese.

        Katherine L. Wambsgans, for respondent.



                  MEMORANDUM FINDINGS OF FACT AND OPINION


        ARMEN, Special Trial Judge:    This case was heard pursuant to

the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1


        1
            Unless otherwise indicated, all section references are to
                                                        (continued...)
                                - 2 -


     Respondent determined a deficiency in petitioners' Federal

income tax for the taxable year 1995 in the amount of $582.

     After a concession by petitioners,2 the issue for decision

is whether petitioners must report on their joint return the

$1,640 of wage income received by petitioner wife.    We hold that

they must.

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and they are so

found.   Petitioners resided in Mogadore, Ohio, at the time that

their petition was filed with the Court.

     Petitioners filed a joint Federal income tax return for the

year in issue.   Petitioners' return was prepared by Linda Havens

(Ms. Havens).    On Form 1040A, line 6(e), a total of 4 exemptions

were claimed.    On line 21, Ms. Havens incorrectly calculated the

total exemptions of $10,000 (4 × $2,500) to be $1,000.    As a

result of this mathematical error, petitioners reported an

additional $9,000 in taxable income.    Petitioners signed their

return on February 4, 1996, and claimed a refund due of

$1,264.41.



(...continued)
the Internal Revenue Code in effect for the taxable year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
     2
        Petitioners concede that petitioner wife received $1,640
of wage income during the year in issue.
                               - 3 -


     Petitioners' mathematical error at line 21 of Form 1040A was

detected by respondent's Cincinnati Service Center during the

initial processing of petitioners' income tax return.   After

identifying the mathematical error on petitioners' return, the

Cincinnati Service Center mailed petitioners a Correction Notice

dated March 18, 1996, indicating a refund of $2,616.41 was due

petitioners.

     Soon thereafter, petitioners received a refund check for

$2,616.41 from respondent.   Petitioners contacted the Service

Center to ensure that they were entitled to the additional $1,352

of refund, and after being assured that the amount was correct,

they proceeded to cash the refund check and spend the proceeds.

     On November 25, 1997, respondent issued a notice of

deficiency, determining that petitioners had failed to report

$1,640 of wage income received by petitioner wife.   This

adjustment resulted in $248 of additional tax and a recapture of

earned income credit in the amount of $334.3

                              OPINION

     Petitioners contend that they did not report petitioner

wife's wage income because they were told by Ms. Havens that

petitioner wife qualified as a dependent of petitioner husband



     3
        Petitioners do not contest that the recapture of the
earned income credit is purely a mechanical matter dependent upon
the disposition of the issue herein involved.
                               - 4 -


and that as a dependent earning less than $2,500 of income in any

given year, petitioner wife was not required to report that

income.

     Section 61(a)(1) defines "gross income * * * [to mean] all

income from whatever source derived, including (but not limited

to) * * * Compensation for services".   "Wages * * * are income to

the recipients".   Sec. 1.61-2(a)(1), Income Tax Regs.   Income has

also been defined as "undeniable accessions to wealth, clearly

realized, and over which the taxpayers have complete dominion."

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955).

Unless specifically excluded by another provision of the Internal

Revenue Code, all income is subject to tax.   See id. at 430.

Therefore, petitioner wife's wages must be included in

petitioners' gross income and may be excluded therefrom only if

allowed under some provision of the Internal Revenue Code.

     The theory advanced by petitioners for the exclusion of

petitioner wife's wages from income is not supported by any

statutory basis.   First, under section 152(a), the term

"dependent" clearly does not include a spouse.4   Second, even if


     4
        To qualify as a "dependent" within the meaning of sec.
152(a), an individual must either be related to the taxpayer in
one of the 8 specific ways enumerated by the statute, see sec.
152(a)(1) to (8), or be a member of the taxpayer's household for
the entire taxable year, see sec. 152(a)(9). See also sec.
1.152-1, Income Tax Regs.   A taxpayer's spouse is not related to
the taxpayer in any of the specific ways enumerated by the
                                                   (continued...)
                                - 5 -


petitioner wife did qualify as a dependent of petitioner husband,

nothing excludes the income of a spouse--even if the income is

less than $2,500--from exclusion on a joint return.    Rather,

section 6013(d)(3) provides that if a joint return is filed, "the

tax shall be computed on the aggregate income" of both spouses.

Therefore, petitioner wife's wage income is includable on

petitioners' joint return.

     Alternatively, petitioners contend that they should not now

be required to pay an additional tax for the year in issue

because they received a refund for that year for an additional

amount they did not claim on their return.    Petitioners contend

that respondent should have ensured that no other taxes were

owing before issuing the additional $1,352 refund.    We disagree.

     Petitioners in essence did claim the full $2,616.41 refund

on their return by entering 4 exemptions on line 6(e) of their

Form 1040A.   It was only due to a mathematical error by Ms.

Havens that the actual refund amount entered on lines 30 and 31

of that return was lower.    Thereafter, respondent acted



     4
      (...continued)
statute and, although a taxpayer's spouse may very well be a
member of the taxpayer's household for the entire year, sec.
152(a)(9) specifically excludes a spouse from its coverage.

     Although a spouse does not qualify as a dependent, a spouse
is entitled to a personal exemption for him or herself if a joint
return is filed. See sec. 151(b); sec. 1.151-1(b), Income Tax
Regs.
                              - 6 -


appropriately in light of the fact that the error appearing on

petitioners' return was clearly a mathematical mistake.

     Consequently, respondent did not err by issuing petitioners

a refund and subsequently determining a deficiency (and notably,

a deficiency arising out of an unrelated issue5) for the same

taxable year.

     In light of the foregoing, petitioners must report on their

joint return the $1,640 of wage income received by petitioner

wife.

     To reflect our disposition of the disputed issue,



                              Decision will be entered

                         for respondent.




     5
        As a response to petitioners' claims of injustice, we
note that the mathematical error detected by respondent was
unrelated to respondent's determination regarding the unreported
wage income. Petitioners would be liable for the tax on the
unreported income even if respondent had failed to detect the
mathematical error and had failed to refund petitioners the
additional $1,352 amount. There can be no dispute that
petitioners only benefited from the summary manner in which
respondent detected the mathematical error and processed
petitioners' additional refund.
