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an alternate payee pursuant to a qualified domestic relations
order”.
In the present situation, the QDRO, issued in connection
with Mr. Seidel’s CWSC 401(k) plan, designated petitioner as the
alternate payee of $51,497 of the distribution as we have found.
Therefore, petitioner is not liable for the 10-percent additional
tax pursuant to section 72(t) with respect to the portion of the
$77,000 distribution from Mr. Seidel’s CWSC 401(k) plan that is
includable in her gross income as the alternate payee. Sec.
72(t)(2)(C).
However, petitioner concedes that she received a taxable
distribution from her 401(k) plan held by Putnam Investments for
taxable year 1999 in the amount of $10,412. Petitioner also
testified that she was “nearing [her] 40th birthday” in the
taxable year 1999. Therefore, the distribution from petitioner’s
401(k) plan is considered “early” and subject to the 10-percent
additional tax, unless one of the enumerated statutory exceptions
applied. Petitioner put forth no arguments that an exception
applied to such distribution; thus the distribution of $10,412
from Putnam Investments is subject to the 10-percent additional
tax under section 72(t).
4. Mortgage Interest Deduction
Section 163(a) allows a deduction for all interest paid or
accrued within the taxable year on indebtedness. Section
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