- 4 -
if required". Form 5329 is for reporting "Additional Taxes on
Qualified Plans (Including IRAs) and Other Tax-Favored Accounts".
Respondent determined in the notice of deficiency that
petitioner is liable for the additional tax on an early
distribution from a qualified retirement plan. Petitioner
believes that the additional tax on early distributions is not
applicable in this case because he believes his distribution of
$25,180 was "forced" under his wife's QDRO.
Discussion1
The Deduction of Federal Withholding Tax
Section 62(a)(9) allows deductions under section 165 from
gross income for amounts "forfeited to a bank, mutual savings
bank, savings and loan association, building and loan
association, cooperative bank or homestead association as a
penalty for premature withdrawal of funds". The Federal income
tax withheld from petitioner's IRA distribution is not an amount
forfeited to a bank or other financial institution as a penalty.
The Court notes that petitioner also claimed a credit for
Federal withholding tax of $4,191 on line 57 of his 1998 Federal
income tax return. That amount represents the sum of the amounts
reported on petitioner's Form W-2, Wage and Tax Statement, of
$1,673 and the amount reported on his Form 1099-R, Distributions
1Because the issues in this case are not factual but are
instead legal, sec. 7491 does not apply.
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