T.C. Summary Opinion 2002-15
UNITED STATES TAX COURT
BRYAN K. GAUTHIER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1625-01S. Filed February 15, 2002.
Bryan K. Gauthier, pro se.
Scott T. Welch, for respondent.
POWELL, 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.1 The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority.
1
Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue,
and Rule references are to the Tax Court Rules of Practice and
Procedure.
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Respondent determined a deficiency in petitioner’s 1998
Federal income tax and an addition to tax under section
6651(a)(1) of $3,433 and $321, respectively. After concessions
by the parties,2 the issues are (1) whether petitioner is liable
for the additional tax under section 72(t) and (2) whether
petitioner is liable for the addition to tax under section
6651(a)(1). Petitioner resided in New Orleans, Louisiana, when
the petition in this case was filed.
The facts may be summarized as follows. During 1998,
petitioner received a distribution of $4,388.25 from a section
401(k) retirement plan and $2,470.32 from an employee stock
option plan (ESOP). Regions Bank Delchamps, Inc. was the trustee
for both plans. Petitioner included both distributions in gross
income on his 1998 Federal income tax return, but he did not pay
any additional tax under section 72(t). During 1998, petitioner
had not attained the age of 59-1/2. Petitioner did not claim any
deduction for a dependency exemption on his 1998 return.
Respondent received petitioner’s 1998 Federal income tax
return on July 19, 1999. The return was mailed during that
month, the exact date, however, is unclear. Petitioner had not
2
In the notice of deficiency, respondent determined that
petitioner had additional income from cancellation of a debt
($7,283) and self-employment income ($6,093). Respondent has
conceded both issues. Respondent also disallowed itemized
deductions of $259. Neither in his petition nor at trial has
petitioner raised this issue, and it is deemed conceded. See
Levin v. Commissioner, 87 T.C. 698, 722-723 (1986), affd. 832
F.2d 403 (7th Cir. 1987).
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obtained an extension of time within which to timely file his
1998 tax return.
Discussion
Distributions From Retirement Plans
Section 72(t)(1) provides:
If any taxpayer receives any amount from a qualified
retirement plan (as defined in section 4974(c)), the
taxpayer’s tax under this chapter for the taxable year in
which such amount is received shall be increased by an
amount equal to 10 percent of the portion of such amount
which is includible in gross income.
A “qualified retirement plan” is defined as, inter alia, “a
plan described in section 401(a) which includes a trust exempt
from tax under section 501(a)”. Sec. 4974(c)(1). Petitioner
contends that the ESOP was not a qualified retirement plan. The
record is devoid of any factual bases for this assertion.
Furthermore, respondent introduced into evidence a letter from
respondent that determined that the ESOP was a qualified
retirement plan. See sec. 409. We find that the ESOP was a
qualified retirement plan.3
With regard to the distribution from the section 401(k)
plan, petitioner does not dispute that it was a qualified
3
Sec. 7491(a) provides that the burden of proof as to a
factual issue shifts to respondent if petitioner introduces
credible evidence as to that issue. Assuming, but not deciding
that this issue is factual, petitioner did not introduce credible
evidence to support a contrary position, and sec. 7491(a) is
inapplicable.
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retirement plan. Rather, he contends that the exception to
section 72(t)(1) contained in section 72(t)(2)(B) applies to the
distribution from the section 401(k) plan (and by implication to
the ESOP distribution if the ESOP was a qualified retirement
plan).
Section 72(t)(2)(B) provides for an exception to the
additional tax for:
Distributions made to the employee * * * to the extent such
distributions do not exceed the amount allowable as a
deduction under section 213 to the employee for amounts paid
during the taxable year for medical care (determined without
regard to whether the employee itemizes deductions for such
taxable year).
Petitioner contends that he withdrew the funds because he needed
and used the money to pay his mother’s medical bills. Petitioner
has not substantiated that he paid any of his mother’s medical
bills. But, even if he had, the exception contained in section
72(t)(2)(B) applies to payments that would be deductible under
section 213. Section 213(a) allows deductions for medical
expenses paid for “the taxpayer, his spouse, or a dependent (as
defined in section 152)”. While petitioner’s mother could have
been his dependent, see sec. 152(a)(4), in order for her to
qualify as his dependent, petitioner would have had to provide
over half of her support, sec. 152(a). We note that not only is
the record totally devoid of any evidence to support this
conclusion, but also petitioner did not claim his mother as a
dependent on his 1998 return. We conclude that the section
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72(t)(2)(B) exception is not applicable and that petitioner is
liable for the section 72(t) additional tax.
Failure To File Timely Return
Section 6651(a)(1) provides for an addition to tax where a
return is not timely filed “unless it is shown that such failure
is due to reasonable cause and not due to willful neglect”. The
amount of the addition to tax is “5 percent of the amount * * *
[of the correct tax] if the failure is for not more than 1 month,
with an additional 5 percent for each additional month or
fraction thereof * * * not exceeding 25 percent in the
aggregate”. Sec. 6651(a)(1). Petitioner did not obtain any
extensions of time within which to file his 1998 return, and the
return was due on April 15, 1999. The return was filed July 19,
1999. Petitioner does not dispute these dates. Rather he
contends that, if no tax is due on the return as filed, he is not
liable for any addition to tax if it is later determined that
some tax was due. There is no language in section 6651(a)(1)
that remotely supports petitioner’s argument. Petitioner offered
no evidence or other argument with respect to whether the failure
to timely file was due to reasonable cause and not due to willful
neglect.4 We sustain respondent’s determination.
4
Sec. 7491(c) provides that respondent has the “burden of
production” for the addition to tax. That burden is satisfied
when respondent shows that the return was not timely filed. It
does not include establishing that there was not reasonable
(continued...)
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Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.
4
(...continued)
cause. See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).