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Respondent determined a deficiency in petitioner's Federal
income tax of $3,036 for 1999. Petitioner failed to address in
the petition or at trial the adjustment for unreported interest
income of $15, and the issue is therefore conceded. Rule
34(b)(4). The parties agree that petitioner is entitled to a
child tax credit of $500 and a Hope Scholarship Credit of
$1,237.50. The issues remaining for decision are: (1) Whether
the entire amount of a distribution from petitioner's Individual
Retirement Account (IRA) should be included in income; (2)
whether petitioner is liable for the 10-percent additional tax on
an early distribution from a qualified retirement plan; and (3)
whether the Internal Revenue Service (IRS) misled petitioner, and
if so, what is the effect of the action on this case.
The stipulated facts and exhibits received into evidence are
incorporated herein by reference. At the time the petition in
this case was filed, petitioner resided in Stillwater, Oklahoma.
Background
In May of 1999 petitioner graduated from nursing school.
Petitioner had an IRA with New York Life Insurance and Annuity
Corporation (NY Life). Her IRA was a qualified retirement plan
under section 4974(c). During 1999, when petitioner was not yet
59-1/2 years old, she received a $15,347 lump-sum distribution
from her IRA. She used at least $10,000 of the distribution to
buy her first house.
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