Francisco A. Murillo - Page 10

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               The purpose of the early withdrawal penalty is to prevent              
          the diversion of IRA funds to nonretirement uses and to recapture           
          a measure of the tax benefits that have been provided.  S. Rept.            
          99-313, 1986-3 C.B. (Vol. 3) 1, 612-613; H. Rept. 99-426, 1986-3            
          C.B. (Vol. 2) 1, 728-729; see also Aronson v. Commissioner, 98              
          T.C. 283, 290-291 (1992) (discussing former sec. 408(f), the                
          predecessor of sec. 72(t)).  The language of section 72(t) does             
          not differentiate between voluntary and involuntary withdrawals.            
          Thus, we have held the section 72(t) tax to be applicable where             
          the taxpayer did not initiate the distribution.  Clark v.                   
          Commissioner, 101 T.C. 215 (1993) (pension plan distribution due            
          to termination of plan); Aronson v. Commissioner, supra (IRA                
          distribution followed insolvency of financial institution);                 
          Vorwald v. Commissioner, supra.  On the other hand, in Larotonda            
          v. Commissioner, 89 T.C. at 292, we recognized the same                     
          legislative purpose in respect of the addition to tax on                    
          distributions from Keogh plans under section 72(m)(5), but held             
          that that section did not apply where the proceeds of such a plan           
          were levied upon to satisfy respondent's income tax levy.  We               
          reaffirmed our holding in Larotonda in Aronson v. Commissioner,             
          supra at 292, pointing out that in Larotonda:  "The IRS notice of           
          levy triggered the taxable event, and we were concerned that                
          Congress did not intend the additional tax to apply to such a               
          situation.  Consequently, we ruled for the taxpayers and                    

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