Larry Joe Mills - Page 4

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          Information"; and (4) "Withholding Election".  In the                       
          "Distribution Reason" section, box number 1 was checked for                 
          "Premature Distribution.  Under 59-1/2 and no other exceptions              
          apply".  Under "Withholding Election", the box was checked for "I           
          elect to have Federal income tax withheld from my IRA                       
          distribution (10% withholding)".  The amount of $2,518 is listed            
          in the "Payment Information" section as the amount of Federal               
          income tax withheld and the net distribution is listed as                   
               On January 12, 1998, pursuant to the terms of the QDRO,                
          $17,895 was distributed from petitioner's IRA at PCB to his                 
          former wife.  At the same time, the balance of the IRA, $25,180,            
          was distributed to petitioner as described above.  Petitioner was           
          not yet 59-1/2 years old at the time of the distribution.                   
               PCB issued to petitioner a Form 1099-R, Distributions From             
          Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,              
          Insurance Contracts, etc., showing a gross and taxable                      
          distribution of $25,180 and Federal income tax withheld of                  
          $2,518.  Petitioner filed his Federal income tax return for 1998            
          in which he reported the distribution of $25,180 as income on               
          line 15b.  Petitioner, however, deducted on line 30, "Penalty on            
          early withdrawal of savings", $2,518, and failed to report any              
          amount in the "Other Taxes" section on line 53 of his return,               
          "Tax on IRAs, other retirement plans, and MSAs.  Attach Form 5329           

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