Thomas and Sarah G. Ackerman - Page 3

                                        - 3 -                                         
          salaries, tips, etc.” of $331,916, as reported on the Form W-2.             
          To arrive at adjusted gross income, petitioners deducted                    
          $211,916; the typed-in explanation on line 32 states only:                  
          “income on which tax paid by employer”.  In the notice of                   
          deficiency, respondent disallowed this deduction.                           
               Petitioners contend that the 2001 Form W-2 issued by                   
          employer is incorrect in that it does not reflect income taxes              
          that employer withheld on petitioner’s plan distribution, as                
          required by the plan’s governing document.1  Accordingly,                   
          petitioners contend that they correctly deducted the amount of              
          the plan distribution from gross income on their 2001 joint                 
          Federal income tax return.                                                  
               Petitioners are mistaken.  The Code provides no deduction              
          from gross income for the plan distribution.  See secs. 61 and              
          62.  Rather, it is fully includable in gross income, and any                
          amount withheld as tax would be allowable as a credit pursuant to           
          section 31.  See Goins v. Commissioner, T.C. Memo. 1997-521,                
          affd. without published opinion 151 F.3d 1029 (4th Cir. 1998).              

               1 Petitioners contend that pursuant to sec. 6201(d),                   
          respondent bears the burden of producing information to refute              
          petitioners’ claim that employer withheld Federal income taxes on           
          the plan distribution.  Because our decision in this case does              
          not turn upon which party bears the burden of production or                 
          proof, we need not address this contention.                                 

Page:  Previous  1  2  3  4  5  Next

Last modified: May 25, 2011