Larry Joe Mills - Page 6

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          From Pensions, Annuities, Retirement or Profit-Sharing Plans,               
          IRAs, Insurance Contracts, etc., issued by PCB that shows Federal           
          income tax withheld of $2,518.  What petitioner did was to claim            
          a deduction and a withholding credit for the same $2,518.                   
          Petitioner properly reported the amount as Federal income tax               
          withheld.  The Court concurs in respondent's determination that             
          the deduction of the $2,518 as an amount forfeited as a penalty             
          to a bank is improper.                                                      
          Additional Tax on Early Distributions                                       
               Section 72(t)(1) provides for the imposition of a 10-percent           
          additional tax on early distributions from qualified retirement             
          plans with certain exceptions.                                              
               Petitioner testified that he received the distribution of              
          $25,180 in 1998 upon the oral advice of a bank employee.  If he             
          was going to make the QDRO distribution to his wife, "she said              
          you have to take it all out.  You can't take a part of it out               
          without borrowing the money to replace it back."  Unfortunately             
          for petitioner, he relied on bad advice.  Even if the advice were           
          true, however, the operative provision offers him no relief.                
               Section 72(t)(2) provides that the additional tax on early             
          distributions shall not apply to certain types of distributions.            
          One type of distribution that is not subject to the additional              
          tax is "Payments to alternate payees pursuant to qualified                  
          domestic relations order".  Sec. 72(t)(2)(C).  Under this                   

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