Linda Louise Lodder-Beckert and Timothy Beckert - Page 6

                                         -6-                                          
               On January 8, 2001, petitioner withdrew $15,000 from her               
          IRA.  Approximately 5 months later, she withdrew another $5,000             
          from her IRA.  She used $7,937 of the $20,000 ($15,000 + $5,000)            
          to pay her qualified higher education expenses incurred in 2001.            
          She also used part of the $20,000 to pay down her credit card               
          debts consisting, in part, of her qualified higher education                
          expenses that were charged to those cards before December 31,               
          2000.                                                                       
               Petitioners reported the $20,000 as gross income on their              
          2001 Federal income tax return, but they did not report or pay              
          any additional tax under section 72(t)(1) with respect thereto.             
          Respondent determined in the notice of deficiency that the                  
          $20,000 was subject to that additional tax.  Respondent has since           
          conceded 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 of the fact that petitioner used those funds                
          during 2001 to pay $7,937 of her qualified higher education                 
          expenses for 2001.                                                          
                                       OPINION                                        
               Respondent determined that the distributions made to                   
          petitioner out of her IRA were subject to the 10-percent                    
          additional tax of section 72(t)(1).  As relevant here, section              
          72(t)(1) imposes that tax on an early distribution from an IRA.             
          See also secs. 408(a), 4974(c)(4).  Section 72(t)(2)(E) is an               






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