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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
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Last modified: May 25, 2011