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in, that plan. See, e.g., Publication 590 Situations in Which
You Are Not Covered (2004); Notice 87-16, 1987-1 C.B. 447-448,
Q&A-8. It is true that Mr. Hedrick was not an active participant
in the school system’s plan simply by virtue of his receipt of
benefits from his former employment. However, because he was an
active participant in the school system’s plan for 5 months of
the taxable year in question, he was considered an active
participant for the entire year. See sec. 219(g)(1); see also,
e.g., Wade v. Commissioner, T.C. Memo. 2001-114 (even de minimis
participation during a plan year is sufficient to render a
taxpayer an active participant for the entire year).
Although we can appreciate petitioners’ confusion as to how
Mr. Hedrick’s retirement and subsequent receipt of benefits would
impact contributions made during the same tax year to an IRA,
deductions are a matter of legislative grace, and they must meet
all applicable statutory requirements. INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992). We found petitioners to be
very straightforward and honest, but unfortunately, the Internal
Revenue Code is very specific in its requirements, and we must
enforce the laws as written. See Marsh & McLennan Cos. v. United
States, 302 F.3d 1369, 1381 (Fed. Cir. 2002); Philadelphia &
Reading Corp. v. United States, 944 F.2d 1063, 1074 (3d Cir.
1991). Accordingly, we hold that Mr. Hedrick’s $3,500 IRA
contribution was not deductible for the taxable year in issue.
However, as respondent acknowledged at trial, petitioners
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