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an exempt organization under section 501 of the
internal revenue code. * * *
On his return for the year in issue, petitioner claimed a
$2,000 deduction for a contribution to an IRA and reported
adjusted gross income (AGI) of $37,475. By notice of deficiency,
respondent disallowed the entire IRA deduction. Specifically,
respondent disallowed the deduction to the extent of $1,763 on
the ground that petitioner was an active participant of an
employer-sponsored plan as defined in section 219(g)(5)(A).2
OPINION
In general, a taxpayer is entitled to deduct the amount
contributed to an IRA. See sec. 219(a); sec. 1.219-1(a), Income
Tax Regs. The deduction in any taxable year, however, may not
exceed the lesser of $2,000 or an amount equal to the
compensation includable in the taxpayer's gross income for such
taxable year. See sec. 219(b)(1). In addition, the amount of
the deduction is limited where the taxpayer is, for any part of
the taxable year, an "active participant" in a retirement plan
qualified under section 401(a) or a plan established for its
employees by the United States, by a State or political
subdivision thereof, or by any agency or instrumentality of any
of the foregoing. See sec. 219(g)(1), (5)(A)(i), (iii). In the
2 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable year in
issue.
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Last modified: May 25, 2011