Armando Vega - Page 3





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          Federal income tax and an addition to tax under section                     
          6651(a)(1) of $4,398 and $660, respectively.  The issues are:               
          (1) Whether a distribution from a retirement plan of $27,389 is             
          includable in petitioner’s gross income for the 1998 taxable                
          year; (2) whether petitioner failed to report interest income of            
          $117 for 1998; and (3) whether petitioner is liable for the                 
          addition to tax under section 6651(a)(1) for the 1998 taxable               
          year.2  Petitioner resided in Baton Rouge, Louisiana, at the time           
          the petition was filed.                                                     
               The facts may be summarized as follows.  In October 1998,              
          petitioner received a distribution from a retirement plan3 of               
          $30,389.94.4  Some time prior to this, petitioner had opened a              
          individual retirement account (IRA) and a cash management account           
          (CMA) with Merrill Lynch.  The distribution from the retirement             
          plan was deposited into the CMA.  Petitioner believed that he had           
          instructed his broker at Merrill Lynch to put the distribution              

               2  On his 1998 Federal income tax return petitioner reported           
          taxable income of $12,325 from a teacher’s retirement system.               
          Respondent concedes that petitioner overstated this income by               
          $4,124.  In the notice of deficiency, respondent determined that            
          the addition to tax for late filing under sec. 6651(a)(1) was 15            
          percent of the amount of tax required to be shown on the return.            
          Respondent concedes that the correct percentage is 5 percent.               
               3  The precise nature of this retirement plan is not                   
          contained in the record; the parties agree, however, that the               
          plan is some type of a deferred income retirement program similar           
          to a sec. 401(k) plan.                                                      
               4  The amount of the distribution was $30,389.94.                      
          Respondent agrees that only $27,389 was taxable.                            





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