James M. and Mary N. Gorski - Page 4

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          percent additional tax on the $25,000 IRA withdrawal.                       
          Petitioners were able to substantiate, and respondent has                   
          conceded, that $7,017.01 of the IRA distribution was used to pay            
          qualified higher education expenses in 2001 for Kathleen                    
          consisting of tuition, fees, and room and board.  Petitioners               
          argue that additional expenses totaling $2,684.30 are also                  
          qualified higher education expenses and should not be subject to            
          the 10-percent additional tax.  The disputed $2,684.30 is made up           
          of the following expenses:  (1) $1,585 for a computer; (2) $400             
          for books; (3) $504.12 for housewares, appliances, and furniture;           
          and (4) $195.18 for bedding.                                                
               Respondent agrees that the expenses for the computer,                  
          housewares, appliances, furniture, and bedding were incurred and            
          paid in 2001, but argues that they are not qualified higher                 
          education expenses because they were not required by the                    
          university.  Respondent argues that the book expense was not                
          properly substantiated as having been incurred and paid in 2001             
          for books that were required for Kathleen’s enrollment in                   
          classes.                                                                    














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