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taxable distribution to petitioner in 2001 that is subject to the
10-percent additional tax under section 72(t) and, if so,
(2) whether petitioner’s medical expenses incurred in 2000
and 2001 can be applied to reduce the taxable amount of the
distribution.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner resided in San Antonio, Texas, at the time that she
filed her petition.
Petitioner was employed by United Services Automobile
Association (USAA) until December 26, 2000. During her
employment with USAA, petitioner contributed to USAA’s section
401(k) plan, the USAA Savings and Investment Plan (USAA SIP). On
October 1, 2000, petitioner’s balance in her USAA SIP account was
$20,919.05.
On October 23, 2000, petitioner borrowed $10,400 from her
USAA SIP account. This loan was documented by an agreement
entitled “Savings and Investment Plan Truth in Lending
Disclosures/Promissory Note” (loan agreement). Petitioner
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