Joyce M. Thomas - Page 5

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         retirement plans are defined to include IRAs as defined in                   
         section 408(a) and (b).  Secs. 72(t)(1), 4974(c).  There is no               
         dispute as to whether petitioner’s IRAs are “qualified retirement            
         plans” for purposes of section 72(t).                                        
              The 10-percent additional tax does not apply to certain                 
         distributions from qualified retirement plans, including                     
         distributions made after an employee attains age 59� and                     
         distributions attributable to the employee’s disability.  Sec.               
         72(t)(2)(A)(i), (iii); see sec. 72(t)(2).  For purposes of                   
         section 72, an employee is disabled if she is “unable to engage              
         in any substantial gainful activity by reason of any medically               
         determinable physical condition or mental impairment which can be            
         expected to result in death or to be of long-continued and                   
         indefinite duration.”  Sec. 72(m)(7).                                        
              Petitioner was born in 1958.  The distributions from her                
         IRAs were made in 1999 and 2000.  Because petitioner had not                 
         attained the age of 59� at the time of the distributions, the                
         exception found in section 72(t)(2)(A)(i) does not apply.                    
              During 1999 and 2000, petitioner was employed by Cypress and            
         was running her own startup network marketing business.  Although            
         petitioner testified that the condition of her health slowed her             
         down and forced her to switch from full-time to part-time work               
         during 2000, petitioner was still able to engage in substantially            
         gainful activity.  See sec. 72(m)(7).  Because petitioner was not            

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