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her return as head of household. Respondent disallowed the IRA
deduction.
Petitioner contends that as soon as she ceased working for
CP&L and was not eligible to participate in a qualified
retirement plan with WCHS, she was entitled to the IRA deduction.
Petitioner further contends that “all contributions to that [CP&L
pension plan] in ‘96 were from their [CP&L’s] severance and
package deal.” Petitioner also relies on language found in IRS
Publication 17 (IRS Pub. 17), “1996 Income Tax Guide For
Individuals”, which states that if a taxpayer receives benefits
from a previous employer’s plan and the taxpayer is not covered
under a current employer’s plan, then the taxpayer is not
considered covered by a plan. Respondent contends that during
1996 petitioner was an active participant in an employer pension
plan regardless of the length of time she participated in the
plan. Because petitioner was an active participant and her
adjusted gross income exceeded the applicable limit, respondent’s
position is that petitioner was not eligible to deduct a
contribution made to an IRA in 1996 under section 219(g).
In general, under section 219(a), an individual is entitled
to deduct the amount contributed to an IRA. The amount of the
deduction is limited to the lesser of $2,000 or an amount equal
to the compensation includable in a taxpayer’s gross income for
the year. Sec. 219(b)(1). In addition, the amount of the
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Last modified: May 25, 2011