Tommy L. and Patricia A. Hobson - Page 3

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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.                                                   
          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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