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In the notice of deficiency, respondent determined that
petitioners are liable for the 10-percent additional tax on each
of the early distributions from petitioners’ retirement accounts.
Petitioners timely filed a petition with the Court disputing
the determined deficiencies. Paragraph 4 of the petition states,
in pertinent part, as follows:
We feel very strongly that Brian did qualify for the
medical/disability exemption from the penalty for early
withdrawal. We do have supporting documentation from
medical professionals.
On brief, petitioners argue:
While [Mr. Keeley] is able to work, he cannot return to
occupations that require strategic thinking, planning
and the related stress and responsibility, lest he have
a reoccurrence of that afflicted state [of depression].
* * * Mr Keeley no longer has the capacity to sell
insurance, the commissions from which would generate
substantially more income than his present in-house
desk sales function for his employer [ATI], a telephone
retailer.
Discussion9
Generally, section 72(t)(1) imposes a 10-percent additional
tax on early distributions from qualified retirement plans,10
unless the distribution comes within one of several statutory
exceptions. For example, distributions that are made on or after
9 We decide the principal issue in this case without regard
to the burden of proof. See sec. 7491(a)(1); Rule 142(a); Higbee
v. Commissioner, 116 T.C. 438 (2001).
10 As relevant to the present case, a “qualified retirement
plan” includes an individual retirement account (IRA) and a
qualified pension or profit sharing plan. Sec. 4974(c)(1), (4).
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