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Further, to broadly construe the statute such that the term
“principal residence” encompasses a “first-time marital
residence” extends beyond the plain meaning of the statute.
There is no reference in the statutory language or in the
legislative history indicating that Congress intended a different
analysis for a married couple purchasing their first marital
residence where one spouse has had an ownership interest in a
prior principal residence and the other spouse has not had an
ownership interest in a prior principal residence. If Congress
had intended to create a separate analysis for the marital unit
purchasing its first marital residence, it could have easily done
so explicitly in section 72(t)(8)(D).
Petitioners ask the Court to construe the statute equitably
in their favor. We decline to do so. Although we acknowledge
that petitioners used Mr. Olup’s IRA distribution for laudable
purposes, we must apply the law as Congress enacted it, absent
some constitutional defect, and we may not rewrite it. See
Commissioner v. Lundy, 516 U.S. 235, 252 (1996).
Petitioners do not dispute that Mr. Olup individually is not
a qualified first-time homebuyer under section 72(t)(8)(D).
Therefore, we conclude that $20,617 of Mr. Olup’s IRA
distribution is subject to the additional tax under section
72(t). Accordingly, we sustain respondent’s determination.
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Last modified: May 25, 2011