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taxpayer and a taxpayer’s children at an eligible educational
institution qualify as educational expenses. Sec. 72(t)(7); sec.
529(e)(3)(A) and (B).
Petitioners argue that because money is fungible
petitioners’ December 2001 $18,000 NYU tuition payment for their
son should be deemed to have been funded not in 2001 but in 2002
by the $19,900 early IRA distribution Mary received. Petitioners
also appear to argue that they guaranteed their son’s 2002
$19,263 student loan and that petitioners’ loan guarantee should
be treated as a $19,263 payment on their son’s educational
expenses.
Petitioners also allege that in 2002 petitioners paid other
miscellaneous educational expenses of their son.
We reject petitioners’ arguments.
Petitioners’ December 2001 $18,000 tuition payment for their
son may have necessitated Mary’s $19,900 2002 early IRA
distribution. However, qualified higher educational expenses
paid in a year other than the year of an early IRA distribution
do not reduce the amount of the early distribution subject to the
10-percent additional tax. See Lodder-Beckert v. Commissioner,
T.C. Memo. 2005-162.
Because petitioners have not produced credible evidence that
they guaranteed the $19,263 student loan their son obtained in
2002, we do not address the merits of petitioners’ argument that
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Last modified: November 10, 2007