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Company. Petitioner received the entire distribution in 1998.
Petitioner included the distribution from her retirement
plan in her income tax return for 1998. In a notice of
deficiency dated March 8, 2001, respondent determined a
deficiency of $4,199 in petitioner’s 1998 Federal income tax.
Respondent determined that the entire distribution from
petitioner’s retirement plan in 1998 is subject to the additional
tax under section 72(t)(1).
Discussion
Section 72(t)(1) imposes a 10-percent additional tax on
distributions from qualified retirement plans. Section 72(t)(2)
lists specified exceptions to the imposition of the 10-percent
additional tax. Under the exception described in section
72(t)(2)(E), distributions to an individual from a qualified
retirement plan generally are not subject to the 10-percent
additional tax to the extent the distributions do not exceed the
individual’s qualified higher education expenses for the taxable
year. Qualified higher education expenses include tuition, fees,
books, supplies, and equipment required for enrollment or
attendance of the taxpayer or the taxpayer’s spouse or child,
among others, at an eligible educational institution. Secs.
72(t)(7)(A), 529(e)(3)(A). Under some circumstances, qualified
higher education expenses also may include the costs of room and
board. However, in the present case petitioner has failed to
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