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Employees Union (the stage employees’ union).2 If the stage
employees’ union had a retirement plan, Mr. Hedrick was not a
participant, nor was he eligible to participate therein.
Mrs. Hedrick has been employed by the Royal Sanitary Supply
Company since 2000. In 2004, she was an active participant in
the company’s qualified pension plan, contributing funds and
having a percentage of the contributions matched by her employer.
At some point after retiring from the school system, Mr.
Hedrick contributed money earned working at the stage employees’
union to an individual retirement account (IRA).
Petitioners timely and jointly filed a Form 1040, U.S.
Individual Income Tax Return (return), for 2004, claiming a
$3,500 deduction for the IRA contribution.
Respondent disallowed the entire IRA deduction and
determined an $875 deficiency on the basis of petitioners’ active
participant status.
Discussion3
Generally, a taxpayer is entitled to deduct amounts
contributed to an IRA. See sec. 219(a); sec. 1.219-1(a), Income
Tax Regs. The deduction may not exceed the lesser of (1) the
deductible amount or (2) an amount equal to the compensation
2 Mr. Hedrick continues to be employed there part time.
3 The issue for decision under these facts is essentially
legal in nature; therefore, we decide the instant case without
regard to the burden of proof.
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Last modified: November 10, 2007