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72(t) and determined a deficiency of $10,824 for that tax and the
negligence penalty under section 6662(a).3
Section 72(t) provides for a 10-percent additional tax on
early distributions from qualified retirement plans. Paragraph
(1), which imposes the tax, provides in relevant part:
(1) Imposition of additional tax.-–If any taxpayer
receives any amount from a qualified retirement plan (as
defined in section 4974(c)), the taxpayer’s tax under this
chapter for the taxable year in which such amount is
received shall be increased by an amount equal to 10 percent
of the portion of such amount which is includible in gross
income.
The 10-percent additional tax, however, does not apply to certain
distributions. Section 72(t)(2) excepts distributions from the
additional tax if the distributions are made: (1) To an employee
age 59-1/2 or older; (2) to a beneficiary (or to the estate of
the employee) on or after the death of the employee; (3) on
account of the employee's disability; (4) as part of a series of
substantially equal periodic payments made for life; (5) to an
employee after separation from service after attainment of age
55; (6) as dividends paid with respect to corporate stock
3 The additional tax under sec. 72(t) is 10 percent of
the amount of the distribution. In this case, the distribution
was $115,142.97; therefore, 10 percent of that amount is
$11,514.30. The deficiency determined in the notice of
deficiency is $10,824. At trial, counsel for respondent agreed
that this was an incorrect computation but declined to move to
increase the deficiency to $11,514.30.
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Last modified: May 25, 2011