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petitioners reported a modified AGI of $77,809 on their 1996
Federal income tax return, they are not entitled to any IRA
deduction if petitioner was an active participant in a plan
during 1996.
Petitioners contend that petitioner was not an active
participant in the plan because she earned only 0.083 years of
service credit during 1996, and, at that rate, they further argue
that it would take “over 120 years to accumulate the minimum 10.0
years of credited service” to receive any regular retirement
benefits. We disagree.
This Court has previously held that a person can be an
active participant even though she had only forfeitable rights to
plan benefits and those rights were, in fact, forfeited prior to
becoming vested. See Eanes v. Commissioner, 85 T.C. 168, 170
(1985) (citing Hildebrand v. Commissioner, 683 F.2d 57, 58 (3d
Cir. 1982), affg. T.C. Memo. 1980-532); Wartes v. Commissioner,
T.C. Memo. 1993-84. Although Eanes involved an earlier version
of section 219,2 we apply its reasoning to the facts of the
instant case. Eanes involved a taxpayer who forfeited all rights
under an employer’s retirement plan when he left after only 3
2 Sec. 219, as applicable to 1981, the year in issue in Eanes
v. Commissioner, 85 T.C. 168, 170 (1985) (citing Hildebrand v.
Commissioner, 683 F.2d 57, 58 (3d Cir. 1982), affg. T.C. Memo.
1980-532), did not include a definition of “active participant”.
The flush language currently contained in sec. 219(g)(5),
referring to whether the individual’s rights under the plan are
forfeitable, was then only found in the legislative history.
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