Joseph Jones - Page 6

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          first home purchase exception in section 72(t)(2)(F).                       
          Alternatively, petitioner contends that he had a basis in the               
          amount distributed from his TESPHE account equal to the amount of           
          his previous loan principal repayments and, therefore, that he is           
          subject to the 10-percent additional tax only to the extent his             
          1999 TESPHE distribution exceeded his basis.3                               
          Discussion4                                                                 
               Generally, section 72(t)(1) imposes an additional tax on               
          early distributions from qualified retirement plans “equal to 10            
          percent of the portion of such amount which is includible in                
          gross income.”5  The section 72(t) additional tax does not apply            
          to certain distributions.  For example, distributions that are              
          made on or after the date on which the taxpayer attains the age             
          of 59� are not “early” and therefore not subject to the                     
          additional tax.  Sec. 72(t)(2)(A)(i).                                       






               3  Petitioner contends that if he is subject to the 10-                
          percent additional tax, then he is subject to the additional tax            
          only on $10,774 (the $50,674 distribution less the $39,900 total            
          loan proceeds) as opposed to $50,674.                                       
               4  We decide the issue in this case without regard to the              
          burden of proof.  See sec. 7491; Rule 142(a); Higbee v.                     
          Commissioner, 116 T.C. 438 (2001).                                          
               5  As relevant to the present case, a “qualified retirement            
          plan” includes a qualified pension or profit sharing plan under             
          sec. 401(a).  Sec. 4974(c)(1).                                              





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