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$3,293.20 of the $6,700.00 distribution was for qualified medical
expenses and was an exception to the 10-percent additional tax
due to early distribution. In that regard, petitioner claimed a
standard deduction of $4,300 on her 1999 income tax return.
Presumably, respondent assumed that petitioner’s medical
deductions did not exceed the standard deduction and that the
$3,293.20 amount claimed for exception from the additional tax
was a feasible amount, which was less than the claimed standard
deduction of $4,300.
At trial, petitioner described her illness during 1999, but
she neither testified to nor provided evidence of the amount
incurred for medical care during the 1999 year. Her testimony
with respect to the medical care expenses was vague. Petitioner
simply stated that the medical care expenses were large.
Petitioner’s testimony also included a very implausible
explanation for why she did not have documentary evidence either
showing that she attached the second Form 5329 (covering the
$9,514 distribution) or the type and amount of medical expenses
incurred for care during 1999. We also note that petitioner’s
testimony was contradictory and selective as to her reasons for
not having documentary evidence. Petitioner claimed that she
discarded her records because they had become besmirched by a
sewage overflow 1 week prior to trial. In spite of that claim,
petitioner did provide the Court with some related documents.
Petitioner’s explanation regarding the supporting documentation
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