James E. Copley and Cynthia R. Copley - Page 6

          withholding took place.  Second, it is more likely than not that            
          the difference between the amount distributed by CSRS and the               
          amount later withdrawn by petitioner represents a combination of            
          the 3-percent commission charged by Fidelity for establishing the           
          account and a decline in the fair market value of the stock                 
          purchased with the IRA funds.  Accordingly, respondent is                   
          sustained on this issue.                                                    
          Issue 2.  Adjustment to Income                                              
               On their 1990 Federal income tax return, petitioners claimed           
          an adjustment to income for a penalty on early withdrawal of                
          savings in the amount of $1,614.91.  Petitioner argues that this            
          amount, representing the difference between the amount deposited            
          in his Fidelity IRA and the amount later withdrawn, was tax                 
          withheld by Fidelity.                                                       
               Petitioner confuses three separate and distinct concepts:              
          (1) The tax due on a lump-sum distribution from a qualified                 
          benefit plan under section 402(a); (2) a penalty imposed by banks           
          on early withdrawal of savings from time savings accounts,                  
          certificates of deposits, and similar classes of deposits, and              
          deductible under section 62(a)(9); and (3) a penalty imposed by             
          section 72(t) on premature distributions.  Petitioner appears to            
          argue that the $1,614.91 simultaneously represents all of the               
          above.  Petitioner presented no evidence that Fidelity imposed a            
          penalty for premature withdrawal of savings, and it is not the              
          responsibility of financial institutions to impose and collect              

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