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The issues for decision are: (1) Whether petitioner is
entitled to a $2,000 deduction for a contribution to an
individual retirement account (IRA) in 1994; (2) whether a $500
distribution received by petitioner from an IRA is includable in
gross income; and (3) whether petitioner is liable for the 10-
percent additional tax under section 72(t) on a premature
distribution from an IRA.
Some of the facts were stipulated, and those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioner's
legal residence was Raleigh, North Carolina.
During the year at issue, petitioner was employed as a
research technician by the U.S. Department of Agriculture (USDA)
in Raleigh, North Carolina. Petitioner had a degree in
agricultural and biological life sciences from North Carolina
State University and, since the early 1990's, had studied DNA
breakdown in various plant life for USDA.
In November 1993 (the year prior to the year at issue),
respondent issued a Notice of Levy to Asheville Savings, a bank
in Asheville, North Carolina, with respect to petitioner's unpaid
tax liability for the 1985 tax year. Pursuant to the Notice of
Levy, Asheville Savings, in December 1993, paid $1,562 to
respondent in satisfaction of the notice. The $1,562 was paid
out of the proceeds of a premature withdrawal from petitioner's
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