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Petitioner was employed by the Oster Division of Sunbeam
Corporation (Oster) until it went out of business in 1990. It is
unclear from the record the exact dates of petitioner’s
employment. At some time during 1990, petitioner received a
lump-sum distribution in the amount of $26,513 from the Oster
Division Sunbeam Employees Profit Sharing Plan (Plan). In 1990,
the Plan was “qualified” within the meaning of section 401(a).
Petitioner had not attained the age of 55 in 1990. The
distribution was not rolled over into an individual retirement
account or other qualified retirement plan and was not reported
on petitioners' income tax return for the taxable year 1990.
Petitioners have four children; one child has multiple
sclerosis and is confined to a wheelchair. Petitioners care for
Mrs. Hobson's father who suffered a stroke and has had both legs
amputated. Petitioner's father lives with petitioners. Mr.
Hobson is employed in a minimum security prison for women. Due
to the location of Mr. Hobson's job, petitioners lived separately
for sometime during 1990.
OPINION
Issue 1. Plan Distribution
The first issue for our decision is whether a distribution
from petitioner's profit sharing plan in 1990 is includable in
income, and, if so, whether petitioners are liable for the 10-
percent tax on an early distribution from petitioner's plan under
section 72(t). Section 402(a)(1) provides the general rule that
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