- 27 -
were made in 2000, before petitioner or Mrs. Bhattacharyya
attained age 59-1/2.15 Petitioners do not allege and the record
does not reflect that the distributions were attributable to
disability, or that the distributions otherwise qualify for an
exception to the 10-percent additional tax. In fact, petitioners
state on brief that “Petitioners do understand that petitioners
have to pay 10% penalty tax on the amount stated above * * * This
is consistent with IRC section 72(t)(1).” Therefore, we find
that petitioners are liable for the 10-percent additional tax on
the early distributions from Plan 15105 and Plan 15106 of $14,443
and $30,623, respectively, and on the early distributions
totaling $749,930 from the Fidelity IRA and the US Bancorp IRA.
IV. Itemized Deductions
Deductions are a matter of legislative grace and are
allowable only as specifically provided by statute.16 See
INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Joseph v.
Commissioner, T.C. Memo. 2005-169. Itemized deductions allowed
15 Nor had petitioner attained age 55 so as to be eligible
for an exception based on his separation from service. See sec.
72(t)(2)(A)(v).
16 Generally, taxpayers also bear the burden of proving
they are entitled to deductions. INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992); Joseph v. Commissioner, T.C. Memo. 2005-
169. However, the resolution of this issue does not depend on
which party bears the burden of proof, and we resolve this issue
based on the preponderance of the evidence in the record.
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