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which did not entitle her to receive any regular plan benefits.
At no time did petitioner receive benefits under the plan.
In 1996, petitioners contributed $2,000 each to their
respective IRA’s. On their 1996 joint Federal income tax return,
they claimed an IRA deduction of $4,000 and reported adjusted
gross income of $77,142. Respondent determined that petitioners
were not entitled to their IRA deduction pursuant to section
219(g).
In general, a taxpayer is entitled to deduct amounts
contributed to an IRA. See sec. 219(a); sec. 1.219-1(a), Income
Tax Regs. The deduction in any taxable year, however, may not
exceed the lesser of $2,000 or an amount equal to the
compensation includable in an individual taxpayer’s gross income
for such taxable year. See sec. 219(b)(1). The maximum amount
that may be deducted is further limited where the taxpayer or
spouse of the taxpayer is an “active participant” in certain
retirement plans. Sec. 219(g)(1). An “active participant” is
defined by section 219(g)(5) as an individual--
(A) who is an active participant in--
(i) a plan described in section 401(a) which
includes a trust exempt from tax under section 501(a),
(ii) an annuity plan described in section 403(a),
(iii) a plan established for its employees by the
United States, by a State or political subdivision
thereof, or by an agency or instrumentality of any of
the foregoing,
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