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owed for 1999 was "none" should mean that she does not owe any
additional tax.
Respondent concedes that $10,000 of the money that
petitioner used to buy a house qualifies under section
72(t)(2)(F) and (8)(B) for exclusion from the additional tax on
early distributions from a qualified retirement plan. Respondent
contends, however, that the entire distribution must be included
in income and that the amount of the distribution in excess of
$10,000 is subject to the additional 10-percent tax on early
distributions from qualified retirement plans. As to the letter
of March 18, 2002, respondent's position is that the letter was
generated due to an abatement of the premature assessment of the
deficiency in this case and has no legal significance here.
As there are no factual issues in dispute in this case,
section 7491 is not implicated. Petitioner testified that
unnamed IRS employees told her that if her IRA distributions were
used for the purchase of a new home they were not taxable and
there would be no "penalties". Whether or not petitioner was
given incorrect advice by IRS personnel, bad advice is not
binding on the Commissioner.1 Darling v. Commissioner, 49 F.2d
111, 113 (4th Cir. 1931), affg. 19 B.T.A. 337 (1930); Fortugno v.
Commissioner, 41 T.C. 316, 323-324 (1963), affd. 353 F.2d 429 (3d
1Under certain circumstances, however, erroneous written
advice may be grounds for abatement of the portion of any penalty
or addition to tax attributable to the erroneous advice. Sec.
6404(f).
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