Hossam Helmy El-Bibany and Selma Hassan Kandil - Page 6

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          indicated that the early distribution was not subject to tax                
          under exception 7 (Individual retirement account (IRA)                      
          distributions made to unemployed individuals for health insurance           
          premiums) and exception 8 (IRA distributions made for higher                
          education expenses).                                                        
               In the notice of deficiency, respondent determined that                
          petitioners are liable for the 10-percent additional tax on an              
          early distribution from a qualified retirement plan.                        
               Petitioners timely filed a petition with the Court disputing           
          the determined deficiency.                                                  
                                     Discussion6                                      
               Section 72(t)(1) imposes an additional tax on distributions            
          from a qualified retirement plan equal to 10 percent of the                 
          portion of such amount that is includable in gross income unless            
          the distribution comes within one of several statutory                      
          exceptions.7                                                                
               As relevant herein, section 72(t)(2) exempts the following             
          distributions from the additional tax if the distributions are              
          made for:  (1) Health insurance premiums for an unemployed                  
          individual, sec. 72(t)(2)(D); or (2) qualified higher education             

               6  We decide the issue in this case without regard to the              
          burden of proof because the issue is essentially one of law.                
               7  Although the record does not describe Mr. El-Bibany’s               
          retirement plan, the parties have proceeded on the basis that the           
          distribution was from an individual retirement plan within the              
          scope of sec. 72(t).                                                        





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