James G. and Anita M. Forret - Page 4

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          respectively.  Total Lighting Sales, Inc., did not reduce                   
          petitioner’s salary to fund the deposits or make contributions on           
          his behalf.  Instead, petitioner made the deposits using funds              
          drawn from his personal savings account.                                    
               On their joint 2003 and 2004 Federal income tax returns,               
          petitioners claimed deductions for the amounts deposited into the           
          SIMPLE IRA.1  Respondent issued petitioners a notice of                     
          deficiency in December 2005, disallowing the claimed deduction              
          for each year.                                                              
               In general, the Commissioner’s determination set forth in a            
          notice of deficiency is presumed correct.  Rule 142(a)(1); Welch            
          v. Helvering, 290 U.S. 111, 115 (1933).  In certain                         
          circumstances, the burden of proof may shift to the Commissioner.           
          Sec. 7491(a)(1); Rule 142(a)(2).  Because the facts are not in              
          dispute, we decide this case without regard to the burden of                
               A SIMPLE IRA is a retirement plan for small employers.  Sec.           
          408(p)(2)(C)(i); Notice 98-4, 1998-1 C.B. 269.  In general,                 
          contributions made to a SIMPLE IRA plan are not included in an              
          employee’s gross income.  Sec. 402(h)(1), (k); Notice 98-4, Q&A             
          I-1, 1998-1 C.B. at 275.  Contributions can only be made under a            

               1 Although petitioner deposited $10,500 to the SIMPLE IRA in           
          2004, petitioners claimed only a $9,315 deduction for that year.            

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