- 11 -
using a ratio determined by dividing the excess of the taxpayer's
modified AGI over $40,000 by $10,000. Id.
Notwithstanding the foregoing limitation, section 408(o)
permits individuals to make designated nondeductible IRA
contributions to the extent that deductible contributions are not
allowable because of the active participant reduction rule set
forth in section 219(g). Sec. 408(o)(1) and (2). Specifically,
an individual may make nondeductible contributions to the extent
of the excess of (1) the amount allowable as a deduction under
section 219 determined without regard to the reduction for active
participants over (2) the amount allowable as a deduction under
section 219 determined with regard to such reduction. Sec.
408(o)(2).
As relevant herein, a contribution to an IRA that exceeds
the amount allowable as a deduction under section 219(a),
computed without regard to the active participant reduction rule
under section 219(g), is considered an excess contribution. Sec.
4973(b).11
In the present case, petitioner made an excess contribution
to his Loyola IRA in the amount of $80,900 for 1989 (i.e.,
11 As relevant herein, an excess contribution may also be
viewed as the amount of an IRA contribution that exceeds the sum
of (1) the deductible limit under sec. 219(a), computed with
regard to sec. 219(g), and (2) the nondeductible limit under sec.
408(o). S. Rept. 99-313, 545 (1986), 1986-3 C.B. (Vol. 3) 1,
545.
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