David Edward Neumeister - Page 4

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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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