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case of a taxpayer who files a return as a single individual, the
deduction is reduced using a ratio determined by dividing the
excess of the taxpayer's modified adjusted gross income3
(modified AGI) over $25,000, by $10,000. See sec. 219(g)(2) and
(3). This provision results in a total disallowance of the IRA
deduction where the total modified AGI exceeds $35,000. See
Felber v. Commissioner, T.C. Memo. 1992-418, affd. without
published opinion 998 F.2d 1018 (8th Cir. 1993). Because
petitioner reported modified AGI of $39,475 on his 1996 income
tax return, he is not entitled to any IRA deduction if he was an
active participant in a plan defined in section 219(g)(5)(A)
during 1996.
Petitioner contends that although he was an active
participant in the MPSERS, the MPSERS is not a plan defined in
section 219(g)(5)(A)(iii). Petitioner refers us to the fact that
he is an employee of the Lansing school district. As such,
petitioner claims that he is not an “employee” of the State of
Michigan, the government unit responsible for establishing and
maintaining the MPSERS. Petitioner concludes, therefore, that
because the MPSERS was not established by his employer, the
Lansing school district, he was not an active participant in a
3 As relevant herein, modified adjusted gross income means
adjusted gross income computed without regard to any deduction
for an IRA. See sec. 219(g)(3)(A).
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Last modified: May 25, 2011