T.C. Memo. 2005-124
UNITED STATES TAX COURT
HENRY USCINSKI AND JACQUELINE USCINSKI, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1467-03. Filed May 25, 2005.
Henry Uscinski and Jacqueline Uscinski, pro sese.
Scott A. Hovey, for respondent.
MEMORANDUM OPINION
GERBER, Chief Judge: This case is before the Court on
respondent’s motion for summary judgment. The issue for our
consideration is whether petitioners were subject to a 10-percent
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additional tax under section 72(t)1 for an early pension
distribution.
Background
At the time of the filing of the petition in this case,
petitioners resided in Great Falls, Virginia.
Petitioners’ petition was filed on January 27, 2003. Since
then, Henry Uscinski (Mr. Uscinski) has been incarcerated, and
mail addressed to Jacqueline Uscinski (Ms. Uscinski) was returned
as undeliverable. Respondent attempted to contact petitioners to
engage in pretrial preparation such as stipulation of facts and
interrogatories. Petitioners did not respond to respondent’s
requests. Respondent then filed motions to cause proposed
stipulations of fact to be deemed admitted under Rule 91(f) and
to compel answers to interrogatories. Petitioners did not
respond to the motions or to the Court’s orders issued in
connection therewith. On March 29, 2004, the Court entered
orders deeming certain proposed facts and exhibits stipulated and
compelling answers to interrogatories.
On April 1, 2004, respondent moved for summary judgment.
Thereafter, Mr. Uscinski, contending his incarceration made it
difficult to timely respond to court documents, filed a motion
for continuance of trial and for this Court to vacate its order
1
Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to sections of the Internal Revenue Code in effect
for 1999, the year in issue.
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deeming certain facts stipulated and compelling answers to
interrogatories. On April 15, 2004, the Court granted Mr.
Uscinski’s motions and gave petitioners additional time to show
cause why certain matters in the stipulation of facts should not
be deemed established and to respond to respondent’s motion to
compel answers to interrogatories. Subsequently, Mr. Uscinski
responded to the interrogatories and addressed respondent’s
proposed stipulated facts. On June 3, 2004, the Court entered an
order deeming certain facts stipulated on the basis of Mr.
Uscinski’s responses. Petitioners did not respond to
respondent’s first motion for summary judgment.
Among other things, Mr. Uscinski’s responses to
interrogatories and deemed stipulations of fact show the
following. On or around December 15, 2000, petitioners filed a
joint 1999 Form 1040, U.S. Individual Income Tax Return,
reporting a $161,447 taxable pension distribution from a section
401(k) account held by Fidelity Investments. Respondent sent
petitioners a notice of deficiency dated August 30, 2002, for
their 1999 tax year, determining a $16,340 tax deficiency and an
$817.01 addition to tax under section 6651(a)(1) for failure to
file. The deficiency arose from respondent’s determination
that the distribution was subject to a 10-percent early
withdrawal tax. In his response to respondent’s request for
interrogatories, Mr. Uscinski admitted that the distribution did
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not meet any of the exceptions enumerated within section 72(t),
other than his contention that the distribution was used to pay
for education expenses.
On August 27, 2004, the Court issued an order denying
respondent’s first motion for summary judgment. First, there was
a discrepancy between the deficiency determination and
petitioners’ return. If the deficiency had been based on a 10-
percent additional tax on the $161,447 distribution, the
deficiency should have been $16,144.70. Respondent, however,
determined a $16,340 deficiency. In addition, the notice of
deficiency contained the determination of an addition to tax
under section 6651(a)(1) for failure to timely file their 1999
tax return. However, the notice of deficiency and the first
motion for summary judgment alleged different due dates for the
1999 return. Accordingly, we held that respondent failed to show
that there was no issue of a material fact.
On March 10, 2005, respondent filed a second motion for
summary judgment, which is now before the Court. For purposes
of that motion, respondent concedes that the amount of the
deficiency should be $16,144.70 and that there should be no
addition to tax for failure to file. In the motion, respondent
provided several reasons as to why the distribution could not
have been for higher education expenses. On April 15, 2005, Mr.
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Uscinski filed a response to respondent’s motion, arguing only
that nothing in Rule 121 permits successive or repeated motions
for summary judgment.
Discussion
The purpose of summary judgment is to expedite litigation
and avoid the expense of unnecessary trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). A motion for summary
judgment may be granted where there is no dispute as to a
material fact and a decision may be rendered as a matter of law.
See Rule 121. The moving party bears the burden of proving that
there is no genuine issue of material fact, and factual
inferences are viewed in a light most favorable to the nonmoving
party. Craig v. Commissioner, 119 T.C. 252, 260 (2002);
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982). The party opposing
summary judgment must set forth specific facts which show that a
question of genuine material fact exists and may not rely merely
on allegations or denials in the pleadings. See Grant Creek
Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988);
Casanova Co. v. Commissioner, 87 T.C. 214, 217 (1986). On the
basis of respondent’s concessions, as noted above, the sole
dispute is whether the distribution is subject to a 10-percent
additional tax.
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A 10-percent additional tax is imposed upon distributions
from a “qualified retirement plan”, unless the distribution
satisfies one of a number of exceptions enumerated under section
72(t)(2). Sec. 72(t)(1) and (2). A qualified retirement plan
includes a section 401(k) plan. Secs. 72(t)(1), 401(a), (k)(1),
4974(c)(1). The distribution was made from a qualified
retirement plan because petitioners acknowledge that the
distribution was made from a section 401(k) plan. In addition,
Mr. Uscinski’s answers to interrogatories concede that the
distribution does not fall within any of the enumerated
exceptions to the imposition of the 10-percent additional tax,
with the exception of his allegation that the early distribution
was for education expenses. Accordingly, we limit our discussion
to whether the distribution could satisfy the higher education
expense exception.
The 10-percent additional tax imposed on early distributions
from qualified retirement plans does not apply to distributions
from individual retirement plans for higher education expenses.
Sec. 72(t)(2)(E). An individual retirement plan is defined as an
individual retirement account or individual retirement annuity
(collectively IRAs) described in section 408(a) or (b). Sec.
7701(a)(37). Section 72(t)(2)(E) was added by the Taxpayer
Relief Act of 1997, Pub. L. 105-34, section 203(a), 111 Stat.
788, 809. The report of the Committee on the Budget refers only
to tax-free withdrawals from IRAs for higher education expenses.
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See H. Rept. 105-148, at 288-289 (1997), 1997-4 C.B. (Vol. 1)
319, 610-611; see also Notice 97-60, sec. 4, 1997-2 C.B. 310,
317-318.
Both section 401(k) plans and individual retirement plans
are subject to the general requirements of section 72(t). See
secs. 72(t)(1), 401(a), (k)(1), 4974(c)(1), (4), (5). However,
classification as a section 401(k) plan is separate and distinct
from classification as an individual retirement plan. See secs.
401(k), 408(a) and (b). The distribution in this case was from a
section 401(k) account, which does not fall within the IRA
category. This conclusion is further supported by the statutory
definition of individual retirement plans, which includes plans
described in section 408 but not those described in section
401(k). See sec. 7701(a)(37). If the distribution had been
made from an IRA, it would have been reported on line 15b,
“Taxable amount” of “Total IRA distributions”, of petitioners’
Form 1040, not on line 16b where it was reported. Because the
distribution was not from an IRA, it would not qualify for the
exception for higher education expenses, even if it were used for
higher education expenses.
Petitioners stated in their petition that the distribution
was from a section 401(k) account, a fact which petitioners have
not denied. Petitioners did not respond to the first summary
judgment motion, and the sole argument presented in the response
to the second motion is that Rule 121 does not provide for
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repeated motions for summary judgment. This argument is without
merit. Rule 121 does not prevent successive motions for summary
judgment.
We conclude that petitioners are liable for the 10-percent
additional tax under section 72(t).
To reflect the foregoing and respondent’s concessions,
An appropriate order and
decision will be entered.