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as a result of a financial hardship when his monthly cash flow was
suddenly reduced. However, no exception exists under section 72(t)
for financial hardship. See Duffy v. Commissioner, T.C. Memo.
1996-556; Pulliam v. Commissioner, T.C. Memo. 1996-354.
The legislative purpose underlying the section 72(t) tax is
that "premature distributions from IRA's frustrate the intention of
saving for retirement, and section 72(t) discourages this from
happening." Dwyer v. Commissioner, 106 T.C. 337, 340 (1996); see
also S. Rept. 93-383, at 134 (1973), 1974-3 C.B. (Supp.) 80, 213.
In order to avoid the section 72(t) tax, petitioners must show that
the November 1993 distribution falls within one of the exceptions
provided under section 72(t)(2)(A). They have not done so.
Consequently, we hold that the November 1993 distribution
impermissibly modified a series of substantially equal periodic
payments. Thus, the 10-percent recapture tax under section
72(t)(4) is applicable to all distributions petitioner received
prior to the date he attained 59-1/2.
To reflect the foregoing,
Decision will be entered
for respondent.
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