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Woodward v. Commissioner, 397 U.S. 572 (1970); United States v.
Hilton Hotels Corp., 397 U.S. 580 (1970). Accordingly, the
organizational expenses of Worldly Connections, Inc., paid by
petitioner are not deductible on petitioner’s 1994 Federal income
tax return.
Similarly, to the extent that petitioner paid any additional
expenses for Worldly Connections, Inc., during the 1994 taxable
year out of her own pocket (e.g., $155), these expenses should
also be considered contributions of capital and are nondeductible
to petitioner on her individual Federal income tax return. See
Deputy v. du Pont, supra.
II. Section 72(t) Tax
Section 72(t) imposes an additional 10-percent tax on the
amount of an early distribution from a qualified retirement
account (as defined in section 4974(c)). See sec. 72(t).
Section 72(t)(2) provides for certain exceptions to the
imposition of this 10-percent tax.
Petitioner received a $35,000 distribution in 1993 and a
$8,717.32 distribution in 1994 from her IRA’s, which are
qualified retirement plans under section 4974(c)(4). Petitioner
testified that she withdrew the money from her IRA’s to provide
for her own subsistence and that of her family. This is not one
of the exceptions set forth in section 72(t)(2), and petitioner
has failed to present evidence that would trigger any of the
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