Beverly Johnson - Page 4

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          a decision from an administrative law judge, and that decision              
          was subsequently affirmed by the California Unemployment                    
          Insurance Appeals Board.                                                    
               At the end of 2003, petitioner received a lump-sum                     
          distribution of $48,994 from her Verizon Pension Plan                       
          (distribution).  At the time, petitioner was 52 years old.                  
               On March 26, 2004, petitioner electronically filed a Form              
          1040, U.S. Individual Income Tax Return, for 2003.  The                     
          distribution was reported as income on the return.                          
               Respondent subsequently issued to petitioner a statutory               
          notice of deficiency for 2003.  Respondent determined that                  
          petitioner is liable for a 10-percent additional tax on the                 
          distribution under section 72(t), because she received the                  
          distribution prematurely.                                                   
               In her petition, petitioner contended that she is not liable           
          for the 10-percent additional tax on early distribution, because            
          she used the distribution to pay her college education expenses.            
          Petitioner later conceded at trial that she was not entitled to             
          the higher education expense exception to avoid the 10-percent              
          additional tax.  Petitioner instead asserted, for the first time,           
          that she withdrew the distribution on account of her disability.            

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