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deficiency, respondent determined that petitioners are liable for
a section 72(t) additional tax of $1,722.
Section 72(t)(1) generally imposes a 10-percent additional
tax on early distributions from qualified retirement plans,
unless the distribution comes within one of several statutory
exceptions. The exception relevant to the case at hand, found in
section 72(t)(2)(B), provides that the following distributions
are not subject to the additional tax:
Distributions made to the employee * * * to the extent such
distributions do not exceed the amount allowable as a
deduction under section 213 to the employee for amounts paid
during the taxable year for medical care (determined without
regard to whether the employee itemizes deductions for such
taxable year).
The deduction allowed under section 213(a) is for “the expenses
paid during the taxable year, * * * for medical care * * * to the
extent that such expenses exceed 7.5 percent of adjusted gross
income.”
Petitioners argue that the distribution from petitioner’s
retirement plan was used to pay medical expenses and therefore
meets the requirements of the section 72(t)(2)(B) exception.
Respondent argues that this exception includes only those
distributions which are used for deductible medical expenses paid
in the same taxable year that the distribution was made.
We agree with respondent. The unambiguous language of
section 72(t)(2)(B) limits the scope of the exception to the
amount of deductible medical expenses “paid during the taxable
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