David Edward Neumeister - Page 3

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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                               
                  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                                

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Last modified: May 25, 2011