Lloyd Patterson - Page 7

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          compensation includable in the taxpayer's gross income or $2,000.           
          Sec. 219(b)(1).                                                             
               The maximum amount that may be deducted is further limited             
          where the taxpayer or the spouse of a taxpayer is an "active                
          participant" in certain retirement plans.  Sec. 219(g)(1).                  
          Section 219(g)(5) defines "active participant" as an individual             
                    (A) who is an active participant in--                             
                    (i) a plan described in section 401(a)                            
                    which includes a trust exempt from tax under                      
                    section 501(a),                                                   
                    (ii) an annuity plan described in section                         
                    (iii) a plan established for its                                  
                    employees by the United States, by a State or                     
                    political subdivision thereof, or by an                           
                    agency or instrumentality of any of the                           
                    (iv) an annuity contract described in                             
                    section 403(b), or                                                
                    (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).                                                 
               There is no evidence and not even a suggestion in the record           
          that petitioner was an "active participant" for purposes of the             
          section 219(g) limitation.  Yet, respondent contends that                   

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