T.C. Summary Opinion 2001-1
UNITED STATES TAX COURT
LESLIE C. BOOTH, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10359-99S. Filed January 3, 2001.
Leslie C. Booth, pro se.
Julie L. Payne, 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.
2
Respondent determined a deficiency in petitioner’s 1996
Federal income tax in the amount of $1,997.1
The sole issue for decision is whether petitioner is liable
for a 10-percent additional tax under section 72(t)(1) on a
$19,971.19 distribution from two individual retirement accounts
(IRA’s).
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time the petition
was filed, petitioner resided in Seattle, Washington.
In 1995, petitioner and Patricia M.L. Booth (Ms. Booth) were
married. In 1996, petitioner was employed as a laborer in a
longshoring yard with Northland Services, Inc. Petitioner
individually owned two IRA accounts with Aetna Life Insurance &
Annuity Co. (Aetna) prior to his marriage with Ms. Booth.
Petitioner and Ms. Booth were divorced in 1998.
During 1996, petitioner testified that he withdrew the full
amount of both IRA accounts at “my wife’s order” so that Ms.
1
The notice of deficiency was addressed to Leslie C. and
Patricia M.L. Booth (Ms. Booth). However, Ms. Booth is not a
party to this action.
3
Booth could remodel her home.2 Petitioner does not have a record
of where the funds were transferred upon withdrawal.
Petitioner did not roll over the IRA amounts into another
qualified employee retirement plan or individual retirement plan.
He received two Forms 1099-R, Distributions From Pensions,
Annuities, Retirement or Profit-Sharing Plans, IRA’s, Insurance
Contracts, Etc., for the year 1996 reflecting the withdrawals
from the IRA’s. The amounts withdrawn were reported on
petitioner’s and Ms. Booth’s joint Federal income tax return.
Although the amount of the distribution was reported on the
return, the 10-percent penalty for early withdrawal was not
reported. Petitioner, who was born on November 15, 1956, was 40
years of age in 1996 when the withdrawals were made.
In a notice of deficiency, respondent determined a
deficiency in the amount of $1,997. This amount represented a
10-percent additional tax on IRA distributions pursuant to
section 72.
Under section 408(d)(1), a distribution from an IRA is
taxable to the distributee in the year of distribution in the
manner provided under section 72. Section 408(d)(3) provides an
exception to the general rule for certain “rollovers” by the
2
The family home was Ms. Booth’s separate property
before marriage. Upon marriage, petitioner became a joint owner
of the home, and then upon divorce the home was awarded to Ms.
Booth.
4
distributee; namely, where a distribution is paid to the
distributee, and the distributee transfers the entire amount of
the distribution to an IRA or an individual retirement annuity
within 60 days of receipt.
Section 72(t)(1) provides for a 10-percent additional tax on
distributions from qualified retirement plans. Section 72(t)(2)
excludes qualified retirement plan distributions from the 10-
percent additional tax if the distributions are: (1) Made on or
after the date on which the employee attains the age of 59-1/2;
(2) made to a beneficiary (or to the estate of the employee) on
or after the death of the employee; (3) attributable to the
employee's being disabled within the meaning of section 72(m)(7);
(4) part of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life
expectancy) of the employee or joint lives (or joint life
expectancies) of such employee and his designated beneficiary;
(5) made to an employee after separation from service after
attainment of age 55;3 or (6) dividends paid with respect to
stock of a corporation which are described in section 404(k). A
limited exclusion is also available for distributions made to an
employee for medical care expenses. See sec. 72(t)(2)(B).
3
This provision, codified at sec. 72(t)(2)(A)(v), is not
applicable to premature IRA distributions. See sec. 72(t)(3)(A).
5
Petitioner’s IRA’s were qualified retirement plans.
Petitioner did not roll over his IRA distributions and does not
claim to fit within any of the statutory exceptions of section
72(t)(2). Petitioner testified that he was made aware at
meetings provided by Aetna regarding his IRA accounts that there
may be a tax because “you always have to pay taxes on something.”
Petitioner would have us consider his actions in light of his
recent legal difficulties in the Washington State courts.
Petitioner has not contested on any specific ground
respondent’s determination that he is liable for a 10-percent
additional tax on his 1996 IRA distributions. Since petitioner
fails to qualify for any of the statutory exceptions under
section 72(t)(2), we hold that petitioner is liable for the
10-percent additional tax on distributions from a qualified
retirement plan for 1996 as provided in section 72(t)(1).
Respondent is sustained on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.