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1998 Federal income tax. The issue is whether a distribution
from petitioner’s retirement plan is includable in petitioner’s
gross income.2 Petitioner resided in San Diego, California, at
the time the petition was filed.
Background
From 1992 to 1999, petitioner was employed as a buyer for
Smith & Nephew, Inc. Smith & Nephew established a retirement
plan for its employees, which the parties stipulate qualifies as
a section 401(k) plan. Fidelity Investments Institutional
Operations Co., Inc. (Fidelity), provided administrative record-
keeping services for petitioner’s retirement plan. Between 1993
and 1996, petitioner contributed elective tax-deferred amounts--
specifically, $5,520 in matched contributions and $1,692 in
unmatched contributions.
On May 15, 1998, respondent served a levy on Fidelity for
unpaid taxes and statutory additions of $5,582.03 for the taxable
year 1996 and sent petitioner a “Taxpayer’s Copy of Notice of
Levy”. Fidelity complied with the levy and distributed $5,582.03
from petitioner’s retirement plan to respondent on June 19, 1998.
2 Respondent did not assess the 10-percent addition to tax for
early withdrawals from qualified retirement plans. See sec.
72(t)(1) and (2)(A). For distributions made on account of a levy
under sec. 6331 before Dec. 31, 1999, the Commissioner acquiesced
following this Court’s decision in Murillo v. Commissioner, T.C.
Memo. 1998-13, affd. without published opinion 166 F.3d 1201 (2d
Cir. 1998), and no longer assesses the 10-percent addition to tax
under sec. 72(t). See also Larotonda v. Commissioner, 89 T.C.
287 (1987).
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