T.C. Summary Opinion 2011-138
UNITED STATES TAX COURT
ALLAN K. VETERE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18287-10S. Filed December 19, 2011.
Allan K. Vetere, pro se.
Kimberly A. Kazda and Bryce Nakamura (student), for
respondent.
GERBER, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
when the petition was filed.1 Pursuant to section 7463(b), the
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.
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decision to be entered is not reviewable by any other court, and
this opinion shall not be treated as precedent for any other
case.
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).
Background
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 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.
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Respondent determined that petitioner was liable for the 10-
percent additional tax of $2,272.50 and that he was not eligible
for any of the section 72(t)(1) exceptions.
Discussion
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). 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.
Decision will be entered
under Rule 155.