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1996, loan disbursement of $8,000 to petitioner. A Union Bank
“Mitsubishi Electric America Inc. Retirement Plan New Loan
Report, 10/20/96 - 10/20/96" showed that petitioner was to repay
the $8,000 loan by making 130 biweekly payments of $76.97. Union
Bank also furnished a copy of an $8,000 loan check payable to
petitioner.
For 1997, petitioner reported $10,820 as income on his
Federal tax return. Yet, he claims he did not remember an $8,000
loan in 1996. This defies reason.
The record clearly reflects that in 1996 petitioner received
an $8,000 loan from his Mitsubishi 401(k) account. It is also
evident that the $7,656.80 withholding made by Union Bank from
petitioner’s 1997 401(k) distribution is in satisfaction of his
outstanding loan balance at the time of the distribution.
Accordingly, petitioner is liable for the 10-percent additional
tax on his 401(k) distribution.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011