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retirement plan. Rather, he contends that the exception to
section 72(t)(1) contained in section 72(t)(2)(B) applies to the
distribution from the section 401(k) plan (and by implication to
the ESOP distribution if the ESOP was a qualified retirement
plan).
Section 72(t)(2)(B) provides for an exception to the
additional tax for:
Distributions made to the employee * * * to the extent such
distributions do not exceed the amount allowable as a
deduction under section 213 to the employee for amounts paid
during the taxable year for medical care (determined without
regard to whether the employee itemizes deductions for such
taxable year).
Petitioner contends that he withdrew the funds because he needed
and used the money to pay his mother’s medical bills. Petitioner
has not substantiated that he paid any of his mother’s medical
bills. But, even if he had, the exception contained in section
72(t)(2)(B) applies to payments that would be deductible under
section 213. Section 213(a) allows deductions for medical
expenses paid for “the taxpayer, his spouse, or a dependent (as
defined in section 152)”. While petitioner’s mother could have
been his dependent, see sec. 152(a)(4), in order for her to
qualify as his dependent, petitioner would have had to provide
over half of her support, sec. 152(a). We note that not only is
the record totally devoid of any evidence to support this
conclusion, but also petitioner did not claim his mother as a
dependent on his 1998 return. We conclude that the section
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Last modified: May 25, 2011