T.C. Summary Opinion 2003-161
UNITED STATES TAX COURT
MARTIN EDWARD CAULFIELD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19485-02S. Filed November 7, 2003.
Martin Edward Caulfield, pro se.
James L. May, Jr., for respondent.
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7463 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.
Respondent determined a deficiency of $1,958 in petitioner's
2000 Federal income tax.
1
Unless otherwise indicated, subsequent section
references are to the Internal Revenue Code in effect for the
year at issue.
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After concessions by petitioner, the issue for decision is
whether, under section 408, distributions to petitioner from two
qualified pension plans with his former employer are includable
in gross income in an amount in excess of the amount reported on
petitioner's 2000 Federal income tax return.2
Some of the facts were stipulated. Those facts and the
accompanying exhibits are so found and are incorporated herein by
reference. Petitioner’s legal residence at the time the petition
was filed was Glenwood, Arkansas.
Petitioner was an electronic computer technician and retired
from Sunoco Oil Co. (Sunoco) during 1993, after working 12 years
with that employer. As an employee of Sunoco, petitioner was the
beneficiary of two retirement plans, which were qualified under
section 401(k). During the year 2000 petitioner received a
distribution from one plan in the amount of $12,500 and a
distribution from the other plan in the amount of $14,000, or a
total of $26,500. Sunoco issued to petitioner two Forms 1099-R,
Distributions From Pensions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc., which state that
the taxable portion of the $12,500 distribution was $12,389.64,
2
In the stipulation, the parties agreed that
petitioner's Social Security benefits during 2000 totaled $15,616
instead of $15,950, as reported on petitioner's income tax
return. Petitioner conceded his failure to report interest
income of $28 and dividend income of $150.
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and the taxable portion of the $14,000 distribution was
$13,893.88. Thus, the taxable portion of both distributions
totaled $26,283.52. Federal income taxes of $2,477.52 were
withheld from the $12,500 distribution, and no Federal taxes were
withheld from the $14,000 distribution. Petitioner stipulated
that he did not roll over his Sunoco distributions into an
eligible retirement plan. Sec. 402(c); sec. 1.402(c)-2, Income
Tax Regs. Petitioner used a portion of the distributions to
purchase stock in Sunoco, Inc.; however, there is no contention,
nor was it established, that the stock purchase constituted a
qualified rollover.
On his Federal income tax return for 2000, petitioner
reported as income IRA distributions of $17,863, with the taxable
amount of these distributions being $17,863. It is evident from
the record that this income represented the distributions
petitioner received from the two qualified Sunoco plans; however,
petitioner presented no evidence at trial explaining how he
arrived at the $17,863 amount.3 Additionally, on his return,
petitioner claimed a tax withholding credit of $3,547.
3
There is evidence in the record that petitioner used
some of the IRA proceeds to purchase stock in Sunoco, Inc. The
Court surmises that the $17,863 reported as income on
petitioner's return represented that portion of the distributions
that was not used to purchase the Sunoco, Inc. stock. In the
stipulation, petitioner agreed that he did not roll over any of
the funds from either of the distributions into another IRA.
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Petitioner's basic argument is that, because he was more
than 59-1/2 years old at the time the IRA distributions were
made, he believed that the distributed proceeds were not taxable
as income. Petitioner was also disabled, unemployed, and "needed
the money to live". Since he was retired, he understood "drawing
from my retirement account" to mean that such funds would not
constitute income.
Petitioner's beliefs about the distributions being
nontaxable because of his age are in error. Generally, section
72(t)(1) imposes an additional tax on early distributions from
qualified retirement plans. That additional tax is 10 percent of
the portion of the plan distribution includable in gross income.
There are certain distributions to which the section 72
additional tax does not apply, one of which is with respect to
distributions on or after the date the recipient taxpayer attains
the age of 59-1/2. Since petitioner had attained age 59-1/2 when
the Sunoco distributions were made, petitioner was not liable for
the 10-percent additional tax under section 72(t). However,
respondent did not determine that petitioner was liable for this
additional tax. Respondent determined that the distributions
simply constituted income for the amounts set out in the
information returns filed by the payor, Sunoco. Moreover,
petitioner's health status and his need for the money are not
grounds for the exclusion of the distributions from gross income,
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nor does "drawing" from his retirement funds connote that such
funds are not taxable. Respondent, therefore, is sustained on
this issue.
Petitioner also contends that he is entitled to a credit for
prior payments or income tax withholdings in excess of the amount
stated in the Form 1099-R filed by Sunoco. However, the Court
lacks jurisdiction to consider this argument because, under
section 6211, a deficiency is determined without regard to the
amount of tax withheld on a taxpayer's income. Redcay v.
Commissioner, 12 T.C. 806, 809-810 (1949); sec. 301.6211-1(b),
Proced. & Admin. Regs.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.