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6402(a),1 of an overpayment made by petitioners in 2003 towards
petitioners’ unpaid 1991 and 1992 tax liabilities.
Background
Petitioners resided in Banning, California, when the
petition in this case was filed.
Petitioners timely filed their joint Federal income tax
return for 2003. On their return, petitioners claimed an
overpayment of $2,372.90. Petitioners also reported a premature
distribution of $17,786.51 from their qualified retirement plan.
Petitioners did not indicate on their return that they were
liable for any additional amount as a result of this premature
distribution.
Respondent applied petitioners’ 2003 overpayment to their
unpaid tax liabilities for 1991 and 1992.2 Respondent
subsequently determined that petitioners’ early distribution from
their qualified retirement plan resulted in a 10-percent
additional tax under section 72(t).3 Accordingly, respondent
1 All section references are to the Internal Revenue Code in
effect for the year in issue.
2 Respondent applied $874.85 against petitioners’ 1991 tax
liability and the remaining $1,498.05 towards petitioners’ 1992
tax liability.
3 Sec. 72(t)(1) generally provides that if a taxpayer
receives any amount from a qualified retirement plan, the
taxpayer’s Federal income tax liability is increased by an amount
equal to 10 percent of the portion of the amount received from
the plan which is includable in gross income. Sec. 72(t)(2)
(continued...)
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Last modified: November 10, 2007