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petitioner’s IRA constituted taxable income to petitioner.
Generally, under section 72(t)(1), a 10-percent additional
tax is imposed on a taxpayer on that portion of an early
distribution from a qualified IRA that is includable in the
taxpayer’s gross income. Because we have concluded that the
$60,000 distribution constituted taxable income to petitioner and
because no exception applies, it follows that petitioner is
liable for the 10-percent additional tax on the $60,000 early
distribution.
Under section 6662, an accuracy-related penalty is to be
added to the portion of an underpayment of tax attributable to
negligence, to a disregard of rules or regulations, or to a
substantial understatement of income tax.
Generally, for purposes of the accuracy-related penalty,
negligence includes a failure to make a reasonable attempt to
comply with the tax laws. Sec. 6662(c). Negligence is indicated
where a taxpayer fails to make a reasonable attempt to ascertain
the correctness of the claimed tax treatment of an item, does not
have a reasonable basis for such tax treatment, and does not act
with reasonable cause and in good faith with respect to such tax
treatment. Secs. 1.6662-3(b)(1)(ii), 1.6662-3(b)(3), 1.6664-
4(a), Income Tax Regs.
Under section 7491(c), respondent has the burden of
production with respect to any penalty. Once respondent comes
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Last modified: May 25, 2011