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Petitioner's basic argument is that, because he was more
than 59-1/2 years old at the time the IRA distributions were
made, he believed that the distributed proceeds were not taxable
as income. Petitioner was also disabled, unemployed, and "needed
the money to live". Since he was retired, he understood "drawing
from my retirement account" to mean that such funds would not
constitute income.
Petitioner's beliefs about the distributions being
nontaxable because of his age are in error. Generally, section
72(t)(1) imposes an additional tax on early distributions from
qualified retirement plans. That additional tax is 10 percent of
the portion of the plan distribution includable in gross income.
There are certain distributions to which the section 72
additional tax does not apply, one of which is with respect to
distributions on or after the date the recipient taxpayer attains
the age of 59-1/2. Since petitioner had attained age 59-1/2 when
the Sunoco distributions were made, petitioner was not liable for
the 10-percent additional tax under section 72(t). However,
respondent did not determine that petitioner was liable for this
additional tax. Respondent determined that the distributions
simply constituted income for the amounts set out in the
information returns filed by the payor, Sunoco. Moreover,
petitioner's health status and his need for the money are not
grounds for the exclusion of the distributions from gross income,
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Last modified: May 25, 2011