Rhett B. and Sandra L. Ross - Page 2

                                        - 2 -                                         
                         OPINION OF THE SPECIAL TRIAL JUDGE                           
               ARMEN, Special Trial Judge:  For the taxable year 1989,                
          respondent determined a deficiency in petitioners' Federal income           
          tax, as well as deficiencies in petitioners' Federal excise taxes           
          under sections 4973 and 4980A,2 in the total amount of                      
          $34,974.34.  The deficiency in income tax includes the 10-percent           
          additional tax imposed by section 72(t) on early distributions              
          from qualified retirement plans.                                            
               The pivotal issue for decision is whether the distribution             
          received by petitioner Rhett B. Ross in 1989 from the Maryland              
          State Teachers' Retirement System qualifies for tax-free rollover           
          treatment under section 402(a)(5).  The resolution of this issue            
          turns on whether the distribution constitutes a "qualified total            
          distribution" as defined by section 402(a)(5)(E)(i). If we                  
          conclude that the distribution in question does not qualify for             
          tax-free rollover treatment, then we must also decide whether               
          petitioners are liable for the 10-percent additional tax under              
          section 72(t).3                                                             

          2 Sec. 4973 imposes a 6-percent excise tax on excess contributions to       
          individual retirement accounts.  Sec. 4980A imposes a 15-percent excise tax on
          excess distributions from qualified retirement plans.  Both of these taxes are
          included within ch. 43 of the I.R.C.  They are therefore subject to the     
          deficiency procedures set forth in subch. B of ch. 63 of the I.R.C.  See sec.
          6211(a).                                                                    
          3 At trial, respondent conceded that the notice of deficiency overstates    
          the amount of the deficiency in excise tax under sec. 4973 and that the     
          correct amount of such deficiency is $4,080 rather than $4,200.  On brief,  
          respondent conceded that petitioner Sandra L. Ross is not liable for any    
          deficiency in excise tax under either sec. 4973 or 4980A.  At trial,        
          petitioner Rhett B. Ross conceded liability for the 15-percent excise tax   
          under section 4980A, and on brief he effectively conceded liability for the 6-
          percent excise tax under section 4973 by abandoning the issue.  See Money v.




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  Next

Last modified: May 25, 2011