Louis G. Boli and Mary K. Boli v. The United States

FRIEDMAN, Circuit Judge.

Section 86 of the Internal Revenue Code of 1954, 26 U.S.C. § 86 (1982 & Supp. II 1984), provides that for a taxpayer whose “modified adjusted gross income” exceeds a certain amount, part of his Social Security benefits must be included in gross income. The question in this tax refund case, here on appeal from the United States Claims Court, is whether the inclusion of tax-exempt municipal bond interest in a taxpayer’s “modified adjusted gross income,” as section 86 requires, results in an impermissible tax on the interest. The Claims Court answered that question…