                  T.C. Summary Opinion 2006-124



                     UNITED STATES TAX COURT



          WALTER A. AND ALFREDA KOCOT, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 22223-04S.              Filed August 1, 2006.


     Walter A. Kocot, pro se.

     Patricia H. Delzotti, 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
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effect for the year in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.

     Respondent determined a deficiency in petitioners’ Federal

income tax in the amount of $986 for the taxable year at issue.

There are two issues for decision: (1) The correct amount of

taxable Social Security benefits received by petitioners in 2002

resulting in the proposed deficiency, and (2) whether petitioners

are entitled to any overpayment for taxable year 2002.

                              Background

     Some of the facts have been stipulated and are so found.

The stipulation of the parties, with accompanying exhibits, is

incorporated herein by reference.    At the time that the

underlying petition was filed in this case, petitioners resided

in Jersey City, New Jersey.

     On or about April 15, 2003, petitioners timely filed their

Form 1040, U.S. Individual Income Tax Return, for 2002, reporting

$24,328.70 in total Social Security benefits received on line

20a, and that same amount, $24,328.70, as the taxable portion

thereof on line 20b.   Petitioners’ reporting $24,328.70 on both

lines 20a and 20b of their 2002 return subsequently spawned a

series of communications between petitioners and respondent’s

Service Center in Chamblee, Georgia.
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     On June 16, 2003, responding to petitioners’ reporting the

same amount--$24,328.70--on both lines 20a and 20b of their 2002

return, respondent sent petitioners a proposed change letter

(June 16 letter) that reduced line 20b of petitioners’ 2002

return to $20,678.    Respondent reduced the amount reported by

petitioners on line 20a of their return ($24,328.70) by 15

percent to accurately reflect the taxable portion thereof

($20,678).    The June 16 letter also corrected the amount claimed

by petitioners as their standard deduction (line 38) from $7,850

to $9,650, since both petitioners were over 65 years of age in

2002.    The 15-percent reduction to the reported amount on line

20a ($24,3291), and the increase in petitioners’ standard

deduction ($9,650), resulted in petitioners’ receipt of a refund

for taxable year 2002 in the amount of $1,472.81.

     After sending the June 16 letter, respondent received

information from the Social Security Administration indicating

that petitioners’ total Social Security benefits received for

taxable year 2002 were actually $28,622 and not $24,320.70, as

petitioners originally reported on line 20a of their 2002 return.

Subsequently, on April 5, 2004, respondent sent a second proposed

change letter (April 5 letter), which increased petitioners’

taxable Social Security benefits received from $20,678 to

$24,329.


     1
         Rounded to the nearest dollar.
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     Subsequent to mailing the April 5 letter, respondent

discovered what was believed to be a second error.   Petitioners

claimed total income tax withholding of $6,682.75 on their 2002

return.   Respondent reduced this amount by $752 to reflect income

tax withheld on a pension plan distributed from Christ Hospital

to petitioner Alfreda Kocot.   This reduction occurred as a result

of petitioners’ erroneous attachment of Forms 1099-R,

Distribution from Pensions, Annuities, Retirement or Profit-

Sharing Plans, IRAs, Insurance Contracts, etc., for both taxable

years 2001 and 2002 to their 2002 return.   Although the $752

reduction was reflected on the April 5 letter, correspondence

between the parties subsequently resolved this discrepancy.

     On June 14, 2004 (June 14 letter), respondent sent a third

revised proposed change letter that restored petitioners’ total

claimed income tax withholding to $6,682.75, yet kept the amount

of taxable Social Security benefits received at $24,329.    As a

result of these changes, the June 14 letter computed an income

tax deficiency of $986.

     Respondent issued a notice of deficiency in the amount of

$986 on August 30, 2004.   Petitioners paid the deficiency on

October 4, 2004, and interest thereon on January 3, 2005.

Petitioners timely filed their petition in the underlying case on

November 22, 2004.
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     Petitioners sent numerous letters contesting respondent’s

proposed changes and asserting that respondent had acted

negligently in making the determinations.    Specifically,

petitioners disagreed with the proposed change provided in the

June 14 letter, and on September 30, 2004 (after the issuance of

the notice of deficiency), notified respondent of their

disagreement including, inter alia, a Social Security benefits

worksheet, which they prepared, that showed $24,329 as the

taxable Social Security benefits received in 2002.    This amount--

$24,329--is the same amount listed on the notice of deficiency.

                           Discussion

     The Commissioner’s determinations are presumed correct, and

taxpayers generally bear the burden of proving otherwise.    Welch

v. Helvering, 290 U.S. 111, 115 (1933).     In this case,

petitioners do not deny their error in reporting $24,329 on both

lines 20a and 20b on their 2002 return.   In fact, before trial,

petitioners paid both the $986 amount in deficiency as well as

$56.68 in interest assessed by respondent.    Petitioners argue

that they are entitled to $1,045.68 as an overpayment of taxes

($986) and interest ($59.68) because:   (1) Respondent failed to

account for $8,000 in estimated payments made by petitioners

towards their 2002 income tax liability; (2) despite petitioners’

admitted errors on their 2002 return, the amount of their
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adjusted gross income did not change, and therefore their overall

tax liability should not change; (3) respondent employed a “slip

shod” method of examination, resulting in petitioners’ receipt of

“four” notices of deficiency; and (4) petitioners were unjustly

given only “three days” to file their petition with the Tax

Court.   For reasons stated herein, we find that petitioners have

not sufficiently proved these claims, that the total amount of

Social Security benefits received by petitioners in 2002 (line

20a) was $28,622, and that petitioners are not entitled to any

overpayment.

     First, petitioners assert that the amount in deficiency

determined in the August 30, 2004, notice of deficiency is

incorrect because respondent failed to account for petitioners’

$8,000 in estimated tax payments.   However, in the June 16

letter, respondent acknowledged petitioners’ total payments of

$16,699 (a $2,016 payment included with their return, $6,682.75

in Federal income tax withheld, and $8,000 in 2002 estimated tax

payments).   Subsequent documents, including the April 5 and June

14 letters, contain only those items for which respondent

proposed a change.   Since respondent did not dispute or propose

any change to the amount of estimated tax petitioners paid in

2002, the estimated tax was not included as part of the proposed

change computations.
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     This omission did not, as petitioners assert, mean that

respondent excluded the $8,000 in estimated tax payments from the

computations.   In fact, the notice of deficiency determined that

the reason for the $986 deficiency was due to an increase in

petitioners’ reported taxable income from $79,355 to $83,006, and

accordingly an increase in the amount of tax due from $15,227 to

$16,213.

     Second, petitioners claim that despite their error in not

reporting the correct amount of total Social Security benefits

received on line 20a of their 2002 return, because the corrected

figure did not change the amount of the total adjusted gross

income, their income tax liability should not change.    Notably,

the parties agree that petitioners’ adjusted gross income for

taxable year 2002 was $98,657.62.   The June 16 letter changed the

amount of standard deduction originally claimed by petitioners on

their 2002 return from $7,850 to $9,650, as both petitioners were

over 65 years of age in 2002.   This correction, coupled with the

$6,000 exemption, resulted in total taxable income of $83,007.62

and not $84,807, as petitioners maintained at trial.

     Accordingly, the amount of tax due on petitioners’ total

taxable income of $83,007.62 was $16,213, with $1,530.25 being

the correct amount of tax owed by petitioners.    Since petitioners

remitted $2,016.25 with their completed 2002 return, they would

have been entitled to an overpayment of $486.    However, since
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respondent refunded $1,472 based upon petitioners’ underlying

error, respondent was correct in subsequently determining a $986

deficiency.2

     In addition to the aforementioned claims, petitioners argued

at trial that respondent engaged in a “slip shod” method of

examination, sending “four” notices of deficiency to petitioners,

and giving petitioners only “three days” to file their petition

with the Court.   While we acknowledge petitioners’ frustration

and confusion, including their receipt of three separate proposed

change letters, we cannot find that respondent acted improperly.

Petitioners received only one notice of deficiency, dated August

30, 2004, that clearly put them on notice that the last date on

which they could file a petition with this Court was November 29,

2004.

     In summary, we find that line 20b of petitioners’ 2002

return should be $24,329, an amount to which all parties agree,

and that because petitioners were awarded a refund greater than

their income tax liability, they are not entitled to any

overpayment pursuant to Rule 55.




     2
       In the June 16 letter, respondent redetermined
petitioners’ adjusted gross income as $95,005. The reason for
this adjustment was that petitioners had reported the same
amount--$24,328.70--on both lines 20a and 20b of their 2002
return. Accordingly, when respondent reduced the line 20a amount
by 15 percent to reflect the taxable portion thereof, the amount
of adjusted gross income was also reduced to $95,005.
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    Reviewed and adopted as the report of the Small Tax Case

Division.

                                         Decision will be entered

                                     for respondent.
