Robert J. Dwyer and Catherine Dwyer - Page 1

                                   106 T.C. No. 18                                    

                               UNITED STATES TAX COURT                                

                 ROBERT J. DWYER AND CATHERINE DWYER, Petitioners v.                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 2626-95.                      Filed May 15, 1996.           

                    P husband, age 53 at the time, made a premature                   
               withdrawal from his individual retirement account (IRA)                
               in 1989.  P was actively engaged as a stock trader                     
               specializing in trading corporate stock on a short-term                
               basis throughout 1989.  During the latter part of the                  
               year he was diagnosed as suffering from clinical                       
               depression.  Held:  Ps are liable for the 10-percent                   
               additional tax on the premature IRA withdrawal.  Sec.                  
               72(t), I.R.C.  Although Ps claimed the exception for                   
               disability contained in sec. 72(t)(2)(A)(iii), I.R.C.,                 
               P husband was not "disabled" within the definition of                  
               that term contained in sec. 72(m)(7), I.R.C. and sec.                  
               1.72-17A(f), Income Tax Regs., since he was not                        
               prevented by his illness from engaging in any                          
               substantial gainful activity.                                          

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