Francisco A. Murillo - Page 4

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          the U.S. Attorney's Office recommended that, because of the                 
          Decree of Forfeiture, the imposition of a fine was not warranted.           
          The sentencing court agreed with the recommendation and, on                 
          June 23, 1992, petitioner was ordered to pay a special assessment           
          of $500 and was sentenced to 38 months' imprisonment for each of            
          the counts, with the terms of imprisonment to run concurrently              
          for a total of 38 months' imprisonment.                                     
               Among the accounts forfeited were petitioner's IRA's at                
          Merrill Lynch and Fidelity Investments (the IRA's).  The total              
          amount forfeited from the IRA's (the IRA distributions) was                 
          $230,161.  Petitioner was 57 years old at the time of the IRA               
               Petitioner reported the IRA distributions as taxable income            
          on his 1992 Federal income tax return.  He did not include the              
          10-percent additional tax on early distributions from qualified             
          retirement plans pursuant to section 72(t) (the section 72(t)               
          tax).  Petitioner does not meet any of the exceptions to the                
          section 72(t) tax provided in section 72(t)(2).2  Petitioner                
          claimed a Schedule C loss, that respondent disallowed, in the               
          amount of $273,417.47, attributed to the forfeiture.                        

               2  The exception for distributions set forth in subparagraph           
          (A)(v) of sec. 72(t)(2) does not apply to IRA distributions.                
          Sec. 72(t)(3)(A).                                                           

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