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Under the terms of the retirement plan, employees would
receive a pension credit if they were employed by Inova on
December 31 and had worked a minimum of 1,000 hours for Inova
during the calendar year. During the year at issue, Mrs.
Colombell worked only 511 hours. In fact, during the entire time
she worked for Inova, Mrs. Colombell never worked 1,000 hours in
any given year. Her pension account balance was zero at all
times, and she remains ineligible for any benefit under Inova’s
plan.
Petitioners timely and jointly filed a Form 1040, U.S.
Individual Income Tax Return (return), for 2002, claiming a
$7,000 deduction for contributions made to their respective
individual retirement accounts (IRAs).2
The Form W-2, Wage and Tax Statement, provided by Inova and
included by petitioners with their 2002 return, indicated that
Mrs. Colombell was an active participant in a qualified
retirement plan in 2002. “Active participant” is a term of art,
see Discussion, infra, and neither Mrs. Colombell nor Inova ever
put any money into the Inova plan for Mrs. Colombell.
2 Each petitioner contributed $3,500 to his or her IRA.
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Last modified: May 25, 2011