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Respondent determined a deficiency in petitioner’s 1997
Federal income tax of $18,296 and a penalty under section 6662 of
$1,456. After concessions by petitioner and respondent, the sole
issue we must decide is whether petitioner is liable for the 10-
percent additional tax under section 72(t) due to an early
distribution to him from his section 401(k) retirement plan.
Petitioner resided in Durham, North Carolina, at the time he
filed his petition. Petitioner was born on September 27, 1953.
Petitioner timely filed his 1997 Form 1040EZ, Income Tax
Return for Single and Joint Filers with No Dependents.
Respondent determined that petitioner failed to report $55,075
from a pension plan and that he was liable for the 10-percent
additional tax of $5,508.
During 1997, Union Bank of California (Union Bank) made a
distribution of $55,404.63 from petitioner’s Mitsubishi Electric
America, Inc. (Mitsubishi) 401(k) account. The distribution
included $329.49 of employee contributions. Petitioner conceded
that the total taxable distribution during 1997 from his 401(k)
account was $55,075.14 ($55,404.63 minus $329.49).
Union Bank withheld $21,976.34 from the $55,404.63 401(k)
distribution to petitioner. Union Bank withheld Federal income
tax of $11,015.03 and State income tax of $3,304.51. This left a
balance of $7,656.80 ($21,976.34 minus $11,015.03 and $3,304.51).
Union Bank identified the $7,656.80 as a loan payoff. Petitioner
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