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The second issue for decision is whether the amount of the
distribution which must be included in petitioners' gross income
is subject to the section 72(t) additional tax.
Section 72(t)(1) provides:
(1) Imposition of additional tax.--If any taxpayer
receives any amount from a qualified retirement plan
(as defined in section 4974(c)), the taxpayer's tax
under this chapter for the taxable year in which such
amount is received shall be increased by an amount
equal to 10 percent of the portion of such amount which
is includible in gross income.
The term "qualified retirement plan" includes any plan
described in section 401(a), which includes qualified stock bonus
plans such as the Gillette ESOP. Sec. 4974(c)(1). Section
72(t)(2) provides exceptions to the imposition of the additional
tax with respect to certain distributions. Petitioners, however,
have not proved that any exception applies in their case. We
therefore hold that the portion of the distribution which we held
must be included in their gross income is subject to the section
72(t) additional tax.
The third issue for decision is the amount and character of
the gain petitioner must recognize from her sale of a portion of
the Gillette common stock.
Section 61(a)(3) includes as gross income gains derived from
dealings in property such as the sale of stock. The amount of
the gain is the excess of the amount realized from the sale over
the adjusted basis of the property at the time of the sale. Sec.
1001(a). The entire amount of the gain determined under section
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Last modified: May 25, 2011