- 4 - 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).Page: Previous 1 2 3 4 5 6 Next
Last modified: May 25, 2011