Santos M. and Ingrid I. Castillo - Page 5

                                        - 4 -                                         

          qualified pension plan.  In such a case, for married taxpayers              
          who file a joint return, the deduction allowable with respect to            
          either spouse is reduced under a formula prescribed in section              
          219(g)(2) and (3).  That formula generally provides for a phase-            
          out of the deductible amount of the IRA where, for the year 1999,           
          the joint income of the taxpayers exceeds $61,000.  Felber v.               
          Commissioner, T.C. Memo. 1992-418, affd. without published                  
          opinion 998 F.2d 1018 (8th Cir. 1993).  In this case,                       
          petitioners' joint income (after their concession of unreported             
          income) totaled $67,638.  Under the statutory formula cited,                
          petitioner is not entitled to an IRA deduction for 1999.                    
               Petitioner's sole contention is that, because he was not               
          vested in the two plans of his former employer, and his amounts             
          in those plans were forfeited when he terminated his employment,            
          he will never receive any benefits from those plans, and,                   
          therefore, he should be allowed a deduction for his IRA                     
          contributions for 1999.  The answer to that argument is that                
          petitioner was nonetheless an active participant in the two plans           
          of his former employer.  He was an active participant because               
          contributions were made to his accounts in the two plans by his             
          former employer.  The mere fact that his accounts in these plans            
          were forfeited when his employment terminated, and that he was              
          not vested when his employment terminated, does not change his              
          status as an active participant.  Sec. 219(g)(5).  A taxpayer is            





Page:  Previous  1  2  3  4  5  6  Next

Last modified: May 25, 2011