2
Petitioners resided in Cary, North Carolina, at the time they
filed their petition.
The issues are: (1) Whether petitioners are liable for
income tax on a distribution from a profit sharing plan pursuant
to section 402(a); and (2) whether petitioners are liable for an
early withdrawal penalty, on the same distribution, pursuant to
section 72(t).
FINDINGS OF FACT
In 1991, Stephen M. Grow (petitioner) worked for Dun &
Bradstreet, Inc. (Dun & Bradstreet) in Tampa, Florida, where he
lived with his family. During 1991, Dun & Bradstreet transferred
petitioner to Raleigh, North Carolina. Petitioner purchased a
house in nearby Cary, North Carolina, in October 1991. Because
petitioner was unable to sell his house in Tampa, he withdrew
$29,000 from his profit sharing plan at Dun & Bradstreet to make
a downpayment on the house in Cary. The withdrawal constituted
approximately one-half of the value of petitioner's account. No
portion of the withdrawn amount was rolled over into another
retirement account. Dun & Bradstreet sent petitioner a Form
1099-R reporting taxable income in the amount of $26,110,
consisting of the $29,000 withdrawal reduced by a prorated
portion of petitioner's investment in the contract.
On their jointly filed 1991 Federal income tax return,
petitioners did not report any income as a result of the
distribution. In the notice of deficiency, respondent determined
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