- 5 -
deductions claimed. Rule 142(a)(1); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992).
With certain limitations, a taxpayer is entitled to deduct
the amounts contributed to an IRA. Sec. 219(a). The deduction,
however, may not exceed the lesser of (1) the deductible amount
or (2) an amount equal to the compensation includable in the
taxpayer’s gross income for such taxable year. Sec. 219(b)(1).
For 2002, the deductible amount is $3,000. Sec. 219(b)(5)(A).
The deductible amount is increased to $3,500 if the taxpayer was
50 or older before the close of the taxable year. Sec.
219(b)(5)(B).
If, for any part of a taxable year, the taxpayer or the
taxpayer’s spouse is an “active participant” in a qualified plan
under section 403(b), the amount of the deduction allowed under
section 219(a) for that year may be further limited. Sec.
219(g)(1), (5)(A)(iv). In the case of a married taxpayer who
filed a joint income tax return, the deductible amount is reduced
using a ratio determined by dividing the excess of the modified
AGI4 over the applicable dollar amount by $10,000. Sec.
219(g)(2)(A). The applicable dollar amount was $54,000 in 2002.
4For purposes of sec. 219(g), modified AGI refers to AGI
that is computed without regard to any deduction for an IRA.
Sec. 219(g)(3)(A). Moreover, in applying sec. 219(g)(2) and (3),
the Court looks to the combined AGI of married taxpayers filing
jointly and not to an individual spouse’s AGI to determine the
reduction or elimination of the IRA contribution deduction. See
Ho v. Commissioner, T.C. Memo. 2005-133.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011