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of-pocket expenses. Because petitioners have failed to
substantiate that the Smith payments were reimbursements for out-
of-pocket expenses, we concur with respondent's determination as
to this issue. Sec. 6001.
In general, section 72 deals with the tax treatment of
distributions from pensions, annuities, and IRAs. See secs.
72(a), (e), 408(d). Section 1.72-1(a), Income Tax Regs.,
provides that section 72 prescribes rules relating to the
inclusion in gross income of amounts received under a life
insurance, endowment, or annuity contract unless such amounts are
specifically excluded from gross income under other provisions of
chapter 1 of the Code. The burden is on petitioners to
demonstrate that the payments in question fall into a specific
statutory exclusion. See Commissioner v. Glenshaw Glass Co., 348
U.S. at 429-431.
Under section 72(t), a 10-percent additional tax is imposed
on an early distribution from a qualified retirement plan, to the
extent that the distribution is includable in gross income.3 An
exception to the additional tax is provided in section
72(t)(2)(B) for medical expenses. Section 72(t)(2)(B) provides
3 An early distribution with respect to a distributee who
continues employment with the employer is one made before the
employee attains the age of 59-1/2. See sec. 72(t)(2)(A)(i). It
is unclear what the age of either petitioner was at the time of
the distribution from the IRA. The Court concludes, based on the
unrefuted assumptions made at trial and in the exhibits, that
neither petitioner had attained the age of 59-1/2.
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