Fred P. and Patricia M. Brandkamp - Page 5




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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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