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under section 72(t). The 10-percent additional tax imposed on
early distributions from a QRP does not apply, however, to
distributions from an individual retirement plan used for higher
education expenses to the extent such distributions do not exceed
the amount of qualified education expenses of the taxpayer for
the taxable year. Sec. 72(t)(2)(E).
The parties agree that the distribution made to petitioner
in 2003 was from a QRP within the meaning of section 401(k).
Petitioner, however, argues that he should not be held liable for
the 10-percent additional tax on this distribution on the grounds
that his request was based on economic hardship, and an exception
for such a request exists under section 401(k)(2)(B)(i).
Petitioner testified that the costs of his law school education,
coupled with the costs associated with his studying for the bar
exam, left him with no viable alternative other than to take a
premature distribution from his QRP. Petitioner testified that
he used the disbursement to pay school loans, pay credit card
bills, and provide for his day-to-day living expenses during the
summer of 2003.
Respondent argues that while section 401(k)(2)(B)(i) does
provide for hardship distributions from qualified pension plans,
that section does not exempt a taxpayer from the 10-percent
additional tax that may apply to such a distribution. At trial,
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