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Respondent determined a deficiency in petitioner’s Federal
income tax of $3,291.90 for 2003.1 The issue for decision is
whether petitioner is liable for the 10-percent additional tax on
an early distribution under section 72(t).
Background
The stipulated facts and the exhibits received into evidence
are incorporated herein by reference. At the time the petition
in this case was filed, petitioner resided in Winneconne,
Wisconsin.
In August 2001, petitioner’s former husband was involved in
a diving accident and became a quadriplegic. From August 2001 to
September 2003, petitioner was employed, but she resigned at the
end of 2003 to care for her two young children. During 2003,
because of financial hardship, petitioner took a lump-sum
distribution of $32,917 from her 401(k) account maintained by her
former employer (distribution). Petitioner used the funds to pay
normal day-to-day living expenses. Petitioner had not yet
reached the age of 55 in 2003.
On April 15, 2004, petitioner electronically filed a Form
1040, U.S. Individual Income Tax Return, for 2003. The
distribution was reported as income on the return.
1In the statutory notice of deficiency, respondent
determined that petitioner is liable for a 10-percent additional
tax of $3,291.70 and a child care credit adjustment of $.20.
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