Debra Sue Tussey - Page 6

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          Cir. 1965); Bagnell v. Commissioner, T.C. Memo. 1993-378.  The              
          Court cannot disregard statutory terms, even when the result in a           
          particular case seems harsh.  INS v. Pangilinan, 486 U.S. 875,              
          883 (1988); Estate of Cowser v. Commissioner, 736 F.2d 1168,                
          1171-1174 (7th Cir. 1984), affg. 80 T.C. 783, 787-788 (1983).               
               The Court will follow the statutory provisions governing the           
          issue in this case.  With exceptions not applicable here, any               
          amount distributed from an IRA must be included in income by the            
          distributee as provided by section 72.  Sec. 408(d).  Therefore,            
          the entire IRA distribution2 petitioner received in 1999 is                 
          includable in her income for the year.  In addition, section                
          72(t) provides that if a taxpayer receives any amount from a                
          qualified retirement plan, the taxpayer's tax "shall be increased           
          by an amount equal to 10 percent of the portion of such amount              
          which is includible in gross income."                                       
               There is an exception to the additional tax required by                
          section 72(t) in the case of "qualified first-time homebuyer                
          distributions".  Sec. 72(t)(2)(F).  The maximum amount of a                 
          distribution that may be treated as a qualified first-time                  
          homebuyer distribution, however, is $10,000.  Sec. 72(t)(8)(B).             
          Any amount of a distribution that petitioner received in excess             

               2For purposes of sec. 72, all IRA distributions during the             
          year are treated as one distribution.  Sec. 408(d)(2).                      

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