Charlotte Marie Scott - Page 6

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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                

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Last modified: May 25, 2011