                  T.C. Summary Opinion 2010-19



                      UNITED STATES TAX COURT



                 NORMAN J. KELLEY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 22639-08S.              Filed February 24, 2010.



     Norman J. Kelley, pro se.

     Denise A. DiLoreto, for respondent.



     WHERRY, Judge:   This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1    Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended and in effect for
the tax year at issue. The Rule reference is to the Tax Court
Rules of Practice and Procedure.
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this opinion shall not be treated as precedent for any other

case.

     Respondent determined that petitioner is liable for a $3,388

Federal income tax deficiency for his 2006 tax year.    Petitioner

timely petitioned the Court to redetermine that deficiency.      The

issue for decision is whether $13,566 (representing 85 percent of

the $15,960 in Social Security benefits that petitioner received

in 2006) is includable in petitioner’s 2006 gross income.



                           Background

     Some of the facts have been stipulated, and the stipulated

facts and accompanying exhibits are hereby incorporated by

reference into our findings.   At the time he filed his petition,

petitioner resided in West Virginia.

     During 2006 petitioner received $15,960 in Social Security

benefits, which was reported to respondent on Form SSA-1099,

Social Security Benefit Statement.     Petitioner filed a Form 1040,

U.S. Individual Income Tax Return, for the 2006 tax year but did

not report any “Taxable amount” from Social Security benefits.

     On September 2, 2008, respondent sent petitioner a notice of

deficiency indicating that he was liable for a $3,388 Federal

income tax deficiency for the 2006 tax year.    Petitioner, on

September 15, 2008, filed a timely petition with this Court.     On

August 21, 2009, the parties filed a joint motion for leave to
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submit case under Rule 122 and a stipulation of facts.     The

Court granted the motion and struck the case from the September

14, 2009, Charleston, West Virginia, trial session.

                            Discussion

     Since 1983, section 86 has required some taxpayers to

include a portion of their Social Security benefits in their

gross income for Federal income tax purposes.   Reimels v.

Commissioner, 123 T.C. 245, 247 (2004), affd. 436 F.3d 344 (2d

Cir. 2006).   Before then, Social Security benefits had not been

taxed.   Congress evidently believed that a change was necessary

to “shore up the solvency of the Social Security trust funds and

to treat ‘more nearly equally all forms of retirement and other

income that are designed to replace lost wages’.”     Id. (quoting

S. Rept. 98-23, at 25 (1983), 1983-2 C.B. 326, 328).    “[B]y

taxing only a portion of the benefits, Congress intended to allow

taxpayers some cost recovery for their contributions (i.e., for

the taxes they pay into the Social Security system).”     Roberts v.

Commissioner, T.C. Memo. 1998-172, affd. without published

opinion 182 F.3d 927 (9th Cir. 1999).

     The formula for determining the portion of Social Security

benefits includable in gross income is set forth in section 86.

Although somewhat complex, the formula provides that a single

taxpayer whose modified adjusted gross income plus one-half of

his or her Social Security benefits received during the taxable
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year exceeds an “adjusted base amount” of $34,000 must include 85

percent of the Social Security benefits in gross income.   Sec.

86(a)(2), (c)(2).

     Petitioner seems to make two arguments.   First he asserts

that one-half of “the amount in * * * [his] social security is

* * * [his] investment/contribution” and that “since Social

Security is taxed through * * * [his] original contribution * * *

[i]f any of * * * [his Social Security] should be taxed, it

should at most be the employer’s contribution.”   Petitioner also

argues that he was not required to include in gross income any

portion of his $15,960 Social Security benefits in 2006 because

all of the benefits were paid out of his contributions.

Petitioner asserts that his Social Security benefits should be

taxed only to the extent that the benefits he received exceed his

Social Security contributions.

     As explained below, we are not persuaded by any of

petitioner’s arguments.   When section 86 was enacted, Congress,

using the same logic as petitioner, set the maximum amount of

taxable Social Security benefits at only one-half of the benefits

received “in recognition of the fact the Social Security benefits

are partially financed by the after-tax contributions of

employees and self-employed individuals.” Roberts v.

Commissioner, supra (citing S. Rept. 98-23, supra at 26, 1983-2

C.B. at 328).   However, in 1994 Congress amended section 86 to
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require that a taxpayer with a modified adjusted gross income

plus one-half of the Social Security benefits exceeding $34,000

(or $44,000 in the instance of a joint tax return) must include

85 percent of Social Security benefits in income.    Omnibus Budget

Reconciliation Act of 1993, Pub. L. 103-66, sec. 13215, 107 Stat.

475.

       Second, petitioner asserted that he was not required to

include in gross income any portion of his 2006 benefits because

all of the benefits were paid out of his contributions.    Although

Congress initially concluded that Social Security benefits should

be treated like other retirement benefits and taxed to the extent

“‘they exceed a worker’s after-tax contributions’”, it ultimately

chose a method of taxation that differs from the manner in which

other retirement benefits are taxed.    Roberts v. Commissioner,

supra (quoting S. Rept. 98-23, supra at 25, 1983-2 C.B. at 328).

This intentional legislative decision increased revenue,

increased productivity, and eliminated the complicated

recordkeeping requirements associated with annuities, which allow

taxpayers to exclude a share of their investment in the periodic

payments.

       Underlying all of petitioner’s arguments is a question of

fairness.    However, as we said in Roberts, this Court is not a

forum to judge legislation.    “‘Normally, a legislative

classification will not be set aside if any state of facts
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rationally justifying it is demonstrated to or perceived by the

courts.’”   Id. (quoting United States v. Md. Sav.-Share Ins.

Corp., 400 U.S. 4, 6 (1970)).    Congress had a valid and rational

basis for the distinctions made in section 86.     Roberts v.

Commissioner, supra.

     Petitioner received $15,960 in Social Security benefits in

2006, and his modified adjusted gross income plus one-half of the

Social Security benefits received exceeded $34,000.     Accordingly,

under section 86, petitioner is required to include 85 percent,

or $13,566, of the Social Security benefits in his 2006 gross

income.

     For the foregoing reasons, we sustain respondent’s

determination of a deficiency for petitioner’s 2006 tax year.

The Court has considered all of petitioner’s contentions,

arguments, requests, and statements.     To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

     To reflect the foregoing,


                                           Decision will be entered

                                      for respondent.
