Joe M. and Patricia M. Brown - Page 16

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          taxable income by $150,000.11  As corollaries to this                       
          determination, respondent also determined that petitioners are              
          liable for: (1) The additional tax under section 72(t) for a                
          premature distribution from the Retirement System; (2) the excise           
          tax under section 4980A for an excess distribution from the                 
          Retirement System; and (3) the excise tax under section 4973 for            
          an excess contribution to petitioner's IRA with First National.12           
          Petitioners' 1990 Income Tax Return                                         
               On their income tax return for 1990, petitioners reported              
          taxable interest in the total amount of $154,613.  Of this                  
          amount, $150,000 represented a distribution from petitioner's IRA           
          with First National, which petitioners characterized as an early            
          withdrawal.  The balance represented interest income from                   
          unrelated bank accounts.                                                    

          11 The notice of deficiency, which was issued by                            
          respondent's Appeals Office in Baltimore, Maryland, states as               
          follows:                                                                    
               Your gross income has been increased to include the                    
               amount of $150,000 you received as payment from your                   
               qualified retirement plan because you received the                     
               payment before you reached aged [sic] 59 1/2 or became                 
               disabled.  Accordingly, taxable income is increased                    
               $150,000.                                                              
          Respondent repeatedly cross-referenced the foregoing paragraph by           
          way of explanation for most of the other adjustments made in the            
          notice of deficiency.                                                       
          12 See supra note 6 regarding respondent's concession of the                
          excise taxes as to petitioner Patricia M. Brown.                            







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