Larry Joe Mills - Page 3

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               Respondent determined a deficiency in petitioner's Federal             
          income tax of $2,901 for 1998.  The issues for decision are:                
          (1) Whether petitioner may deduct the Federal income tax withheld           
          from a distribution from an Individual Retirement Account (IRA),            
          and (2) whether petitioner is liable for the 10-percent                     
          additional tax on an early distribution from a qualified                    
          retirement plan.                                                            
               The stipulated facts and exhibits received into evidence are           
          incorporated herein by reference.  At the time the petition in              
          this case was filed, petitioner resided in Jennings, Oklahoma.              
                                     Background                                       
               In 1994, petitioner rolled over an amount from his 401(k)              
          profit sharing plan at Moore Corporation into an IRA, a qualified           
          retirement plan, at Payne County Bank (PCB) in Perkins, Oklahoma.           
          On November 14, 1997, the District Court In And For Lincoln                 
          County, State of Oklahoma, issued a Qualified Domestic Relations            
          Order (QDRO) in the case of Alvetta J. Mills v. Larry J. Mills.             
          The QDRO ordered PCB to segregate for the benefit of Alvetta                
          Mills, the alternate payee, the sum of $17,745 along with the               
          interest accruing between November 14, 1997, until the date of              
          distribution.                                                               
               Petitioner signed on January 10, 1998, an "IRA Distribution            
          Form", containing several sections, including:  (1) "IRA Owner              
          Information"; (2) "Distribution Reason"; (3) "Payment                       






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