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Atlanta, Georgia. The contribution was made in respect of the
taxable year 1997.
Petitioners timely filed a joint Federal income tax return
(Form 1040) for 1997. On their return, petitioners reported
total income of $79,300, consisting of wages of $79,271 and
taxable interest of $29. Petitioners deducted from total income
the $2,000 amount that had been contributed to Mr. Brandkamp’s
IRA and therefore reported adjusted gross income of $77,300.
Petitioners attached to their 1997 income tax return copies
of wage and tax statements (Forms W-2) that had been sent to them
by their employers. The wage and tax statement from MetLife
indicated that Mrs. Brandkamp was covered by a qualified pension
plan in 1997.
By notice dated January 14, 2000, respondent determined a
deficiency in petitioners’ income tax for 1997. Respondent’s
determination reflects the disallowance of the $2,000 IRA
deduction claimed by petitioners for that year. In this regard,
respondent determined that petitioners were not entitled to any
IRA deduction because Mrs. Brandkamp was covered by a qualified
pension plan and petitioners’ modified AGI exceeded $50,000.4
4 In the notice of deficiency, respondent advised
petitioners as follows: “So your future nontaxable IRA
distributions will be correct, complete Form 8606, Nondeductible
IRAs (Contributions, Distributions, and Basis) to keep for your
records.” (Emphasis added.) At trial, counsel for respondent
(continued...)
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