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(A) In general.--Distributions which are--
* * * * * * *
(iii) attributable to the employee’s
being disabled within the meaning of
subsection (m)(7) * * *.
Section 72(m)(7) provides:
(7) Meaning of disabled.--For purposes of this section,
an individual shall be considered to be disabled if he is
unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be
of long-continued and indefinate duration. An individual
shall not be considered to be disabled unless he furnishes
proof of the existence thereof in such form and manner as
the Secretary may require.
The regulations provide, inter alia, that to be considered
disabled a person is unable to engage in any “substantial gainful
activity”. Substantial gainful activity means the activity, or a
comparable activity, in which the individual customarily engaged
prior to the disability. Sec. 1.72-17(f)(1), Income Tax Regs.
Petitioners agree that there was a distribution during the
taxable year 2001 and that the distribution was taxable. The
question solely concerns whether the section 72(t) additional tax
applies.
Petitioners maintain that petitioner was disabled within the
meaning of section 72(m)(7) during the year of the distribution.
This is somewhat peculiar since petitioner, during the entire
2001 year, was paid a $93,165 salary for his employment with IT.
Furthermore, the reports from his doctors provide that, while he
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