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Petitioner asserts that the IRS’s failure to include the
entire $15,322.69 distribution in gross income on the return
increased his tax liability. He further argues that he should
not be responsible for the deficiency because of economic
hardship. Petitioner makes no argument regarding the $7,000
distribution from ING other than asserting that he does not
remember receiving it. As to the $7,089.95 distribution,
petitioner does not deny that he received a loan from a section
401(k) plan or that the distribution may be includable in gross
income, but argues that the loan balance reflected by Merrill
Lynch is not correct.
Respondent asserts that the proceeds from each distribution
are includable in petitioner’s gross income and that petitioner
is subject to the 10-percent additional tax as each distribution
was premature and none of the exceptions under section 72(t)(2)
applies.
Discussion
I. Burden of Proof
Generally, a taxpayer bears the burden of proving the
Commissioner’s determinations incorrect. See Rule 142(a); Welch
v. Helvering, 290 U.S. 111, 115 (1933). The burden may shift to
the Commissioner if the taxpayer introduces credible evidence and
satisfies the requirements under section 7491(a)(2) to
substantiate items, maintain required records, and fully
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