DocketNumber: Docket No. 18287-10S.
Citation Numbers: 2011 T.C. Summary Opinion 138, 2011 Tax Ct. Summary LEXIS 134
Filed Date: 12/19/2011
Status: Non-Precedential
Modified Date: 11/20/2020
PURSUANT TO
Decision will be entered under Rule 155.
GERBER,
Respondent determined a $2,272.50 deficiency attributable to a 10-percent additional tax for an early retirement account distribution under section 72(t)(1). We consider whether petitioner comes under any of the exceptions, from the additional tax, provided for in section 72(t)(2).
Petitioner, who resided in California at the time his petition was filed, caused an individual retirement account (IRA) distribution to be made to him early in 2007. He received a Form 1099-R, Distributions From Pensions, Annuities, Retirement *135 or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., from the account trustee and reported the $22,725.96 distribution as "wages" on his 2007 Form 1040, U.S. Individual Income Tax Return.
Petitioner was unemployed for approximately 1 year before the IRA distribution. During 2007 he used most of the $22,725.96 distribution for basic living expenses. During 2007 he used $2,273 of the distribution for educational purposes to improve his skills to enable him to find employment. He also used $180 for chiropractor visits and $360 for dentist visits.
Respondent determined that petitioner was liable for the 10percent additional tax of $2,272.50 and that he was not eligible for any of the section 72(t)(1) exceptions.
Section 72(t)(1) provides for a 10-percent additional tax for "early" distributions from a "qualified retirement plan". Section 72(t)(2) provides exceptions from the additional tax under certain specified circumstances. For purposes of this case, if a person is unemployed for a specified time before the distribution, then the amounts of expenditures for health care premiums and medical expenses may be exempt from the additional tax. See generally sec. 72(t)(2)(B), (D). *136 Additionally, certain expenditures for education may be exempt from the additional tax. See generally sec. 72(t)(2)(E).
At trial respondent's counsel agreed that if petitioner substantiated medical and/or educational expenses, he would come within the exception from the additional tax. The evidence petitioner presented at trial supports our holding that petitioner is exempt from the section 72(t)(1) additional tax with respect to $2,813 of the $22,275.96 early distribution.
1. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for 2007, the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩