Basman Ahmad and Khitam Amerneh - Page 7

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          Commissioner, T.C. Memo. 1997-15.  General financial or emotional           
          hardship is not an exception from the section 72(t) additional              
          tax on early retirement plan distributions.  Milner v.                      
          Commissioner, T.C. Memo. 2004-111.  Although the divorce                    
          settlement may have been difficult for Mr. Ahmad, general                   
          hardship is not one of the enumerated exceptions in section                 
               Petitioners also assert that they are not liable for the               
          section 72(t) penalty because Mr. Ahmad suffers from fibromyalgia           
          and chronic fatigue syndrome.  Distributions attributable to a              
          disability within the meaning of section 72(m)(7) are exempted              
          from the 10-percent penalty.  Sec. 72(t)(2)(A)(iii); Meyer v.               
          Commissioner, T.C. Memo. 2003-12.  Under section 72(m)(7), an               
          individual shall be considered to be disabled if he is unable to            
          engage in any substantial gainful activity by reason of any                 
          medically determinable physical or mental impairment that can be            
          expected to result in death or to be of long-continued and                  
          indefinite duration.  Whether the impairment constitutes a                  
          disability is to be determined with reference to all facts in the           
          case.  Sec. 1.72-17A(f)(2), Income Tax Regs.                                
               Mr. Ahmad testified that he was employed by the State of               
          California in 2001 and regularly worked 8-hour days.  His claimed           
          disabilities evidently did not prevent him from engaging in a               
          gainful activity in 2001.  Moreover, Mr. Ahmad wired the proceeds           

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