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addition to tax. Respondent also concedes that $7,937 of the
distributions is not subject to the additional tax under section
72(t)(1) by virtue of section 72(t)(2)(E) and the fact that
petitioner used those funds during 2001 to pay $7,937 of
qualified higher education expenses for that year. Following
these concessions, we are left to decide whether the remaining
distributions totaling $12,063 (disputed distributions) are
subject to the additional tax under section 72(t)(1); petitioner
used part of those funds during 2001 to pay her qualified higher
education expenses for 1999 and 2000. We hold that the $12,063
is subject to the additional tax under section 72(t)(1) in that
none of those funds was used by petitioner to pay qualified
higher education expenses for 2001.
FINDINGS OF FACT
Some facts were stipulated. We incorporate herein by this
reference the parties’ stipulation of facts and the exhibits
submitted therewith. We find the stipulated facts accordingly.
Petitioners are husband and wife, and they filed a joint 2001
Federal income tax return. They resided in Cincinnati, Ohio,
when their petition was filed.
On August 18, 1999, petitioner stopped working for the
University of Cincinnati (University) to attend college. She had
worked for the University for 18 years and had participated in
the Public Employees Retirement System of Ohio (PERS). When she
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