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In the notice of deficiency, the Commissioner determined a
deficiency in the amount of $1,000.11.1 This amount represents a
10-percent additional tax on the early IRA distribution pursuant
to section 72(t).2
Although admitting that the early distributions were made,
the gist of petitioner’s contention is that she is not liable for
the additional tax on the IRA distribution because it was (1)
used to pay medical insurance premiums and therefore met the
requirements of the section 72(t)(2)(D) exception, (2) used to
pay medical expenses and therefore met the requirements of
section 72(t)(2)(B), and/or (3) made because of financial
hardship, therefore making the application of the 10-percent
additional tax inequitable.
Section 72(t)(1) generally imposes a 10-percent additional
tax on early distributions from “a qualified retirement plan (as
defined in section 4974(c)),” unless the distributions come
within one of several statutory exceptions.
The parties do not dispute that petitioner’s accounts were
qualified employee retirement plans and that petitioner did not
“roll over” her distributions pursuant to section 408(d)(3).
1The record is unclear as to how the Commissioner calculated
the amount of deficiency.
2The Commissioner’s notice of deficiency mentioned the
additional tax only with regard to petitioner’s IRA distribution;
there was no mention of her 401(k) qualified retirement plan
distribution.
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Last modified: May 25, 2011