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conservatorship proceedings in the Nebraska county courts; and
fees assessed in prosecution actions related to city ordinances
regulating non-moving traffic violations.
On their 1992 Federal income tax return (the 1992 return),
petitioners reported gross income of $73,505.46 and adjusted
gross income of $71,161.85. The income so reported consists
primarily of petitioner's salary as a Nebraska district court
judge. Mary Fuhrman was unemployed and received no compensation
during 1992. On the Form W-2 provided to petitioner by the State
of Nebraska and attached to the 1992 return, there is an "X" in
the box for pension plan. During 1992, petitioner contributed
$2,250 to individual retirement accounts (IRA's) described in
section 408. On the 1992 return, petitioners claimed a deduction
of $2,250 for the contributions to the IRA's.
In the notice of deficiency, respondent disallowed the IRA
deduction and provided the following explanation:
We didn't allow your deduction for IRA
contributions because you were covered by a
retirement plan at work * * *, and your
"modified adjusted gross income" is more that
$50,000 * * *.
Discussion
As a general rule, a taxpayer is entitled to deduct amounts
contributed to an IRA. Sec. 219(a); sec. 1.219-1(a), Income Tax
Regs. For a married individual filing a joint return, the
deduction in any taxable year may not exceed the lesser of $2,250
or an amount equal to the compensation includable in the
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