Shawn Timothy Hynes - Page 8




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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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