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amount later withdrawn by petitioner represents a combination of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in his Fidelity IRA and the amount later withdrawn, was tax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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