5
(v) a simplified employee pension (within the meaning
of section 408(k)), or
(B) who makes deductible contributions to a trust described
in section 501(c)(18).
The determination of whether an individual is an active
participant shall be made without regard to whether or not
such individual's rights under a plan, trust, or contract
are nonforfeitable. An eligible deferred compensation plan
(within the meaning of section 457(b)) shall not be treated
as a plan described in subparagraph (A)(iii).
In the case of a taxpayer who files a joint return, the deduction
is reduced using a ratio that is a function of the taxpayer's
modified adjusted gross income (modified AGI).3 Sec. 219(g)(2)
and (3). This provision results in a total disallowance of the
IRA deduction where the total modified AGI reported on a joint
return exceeds $50,000. See Felber v. Commissioner, T.C. Memo.
1992-418, affd. without published opinion 998 F.2d 1018 (8th Cir.
1993).
Petitioner contends that he is entitled to a deduction for
his entire IRA contribution because PERS is an eligible deferred
compensation plan. Petitioner argues, therefore, that he is not
an "active participant" within the meaning of section 219(g)(5).
As relevant herein, a deferred compensation plan is defined
by section 457 as a plan established and maintained by a State,
political subdivision of a State, agency, or instrumentality
thereof, or any other nongovernmental organization exempt from
3 As relevant herein, modified adjusted gross income means
adjusted gross income computed without regard to any deduction
for an IRA.
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