                  T.C. Summary Opinion 2001-28



                     UNITED STATES TAX COURT



          ROGER G. AND LILIANNE J. G. MAKI, Petitioners
         v. COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14016-99S.                     Filed March 9, 2001.


     Roger G. and Lilianne J. G. Maki, pro sese.

     Anne S. Daugharty, for respondent.


     GOLDBERG, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the year in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.
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     Respondent determined a deficiency in petitioners’ 1997

Federal income tax in the amount of $2,487.    After concessions,1

the sole issue for decision is whether petitioners are entitled

to an overpayment of their 1997 tax liability.

     Some of the facts were stipulated and are so found.     The

stipulation of facts and exhibits submitted at trial are

incorporated herein.    Petitioners resided in Des Moines,

Washington, at the time their petition was filed.    References to

petitioner in the singular are to Roger G. Maki.

     Petitioner received Form SSA-1099 reporting $7,485.60 in

Social Security benefits in 1997.    Petitioners reported $6,362,

or 85 percent of the Social Security benefits, on their 1997

Federal income tax return.    Petitioners timely filed their

Federal income tax return for 1997.

     In the notice of deficiency, respondent determined that

petitioners failed to report $6,362 taxable Social Security

benefits, $2,494 capital gain dividends, and $366 taxable

dividends.   At trial, respondent accepted petitioners’ 1997

Federal income tax return as filed.2    Nevertheless, petitioners

now contend that the Social Security disability income is non-

taxable because “the bill has never passed that says that Social

Security” is taxable.    On that basis, petitioners believe they

1
     Petitioners concede unreported capital gain of $1,378.
2
     Upon further review, respondent determined that all items on
the notice of deficiency, with the exception of $1,378 of
unreported capital gains, were reported on petitioners’ return,
although on the wrong lines of the return.
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are entitled to a refund for the overpayment of tax.     Respondent

contends that the law is clear and petitioners’ Social Security

income was correctly reported on their 1997 income tax return as

taxable income under section 86(a).     We agree with respondent.

      Under the provisions of section 86, Social Security

disability benefits received after 1984 are subject to tax.

Section 86 was duly enacted by Congress in the Social Security

Act Amendments of 1983, Pub. L. 98-21, sec. 121(a), 97 Stat. 65,

80.   Thus, we are bound to follow the statutes as enacted by

Congress.    See Donigan v. Commissioner, 68 T.C. 632, 633 (1977);

Bailey v. Commissioner, T.C. Memo. 1994-391.

      Section 61(a) provides that, except as otherwise provided by

law, gross income includes all income from whatever source

derived.    Further, section 86(a) provides that if the modified

adjusted gross income of the taxpayer plus one-half of the Social

Security benefits received exceeds the adjusted base amount, then

gross income includes the lesser of: (1) The sum of (a) 85

percent of such excess, plus (b) the lesser of (i) one-half of

the Social Security benefits received during the year or (ii)

one-half of the difference between the adjusted base amount and

the base amount of the taxpayer; or (2) 85 percent of the Social

Security benefits received during the taxable year.     See sec.

86(a)(2).    The base amount and the adjusted base amount for

taxpayers filing a joint return for 1997 is $32,000 and $44,000,

respectively.    See sec. 86(c)(1)(B) and (2)(B).   Petitioner’s
                                - 4 -


modified adjusted gross income equals adjusted gross income less

Social Security benefits.    See sec. 86(b)(2).

     Petitioners reported the following income on their 1997

Federal income tax return:

            Wages                         $64,347
            Taxable interest                2,765
            Dividends                         584
            Capital gain                      256
            Total pensions and annuities3   6,362
            Rental real estate, etc.           58
            Total                         $74,372

For 1997, petitioners’ modified adjusted gross income was

$68,010.4   Because petitioners’ modified adjusted gross income is

more than the adjusted base amount of section 86(c)(2)(B), we

hold that petitioner’s Social Security income is taxable, subject

to section 86(a)(2).    Respondent’s determination is sustained,

and petitioners are not entitled to an overpayment for 1997.    Due

to the concessions made by the parties, the decision will be

entered under Rule 155.

     We note that petitioners have previously litigated this

issue with respect to their 1991 taxable year, and we decided the

issue for respondent.    See Maki v. Commissioner, T.C. Memo. 1996-
209. The Court has considered imposing sanctions on petitioners

under section 6673(a)(2) but declines to do so at this time.




3
     Petitioners mistakenly reported Social Security benefits on
line 16b rather than line 20a.
4
     $74,372 (adjusted gross income) less $6,362 (Social Security
benefits) = $68,010.
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With this in mind, we strongly urge petitioners to reconsider

litigating this issue further.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                              Decision will be entered

                                         under Rule 155.
