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Petitioners' return for 2002 reports taxable "pensions and
annuities" of $25,000 on line 16b. This is the distribution at
issue. By the end of 2002, petitioner, who was born in 1953, had
not attained age 59-1/2, and there is nothing in petitioners'
return to suggest that the distribution is not subject to the
additional tax imposed by section 72(t)(1). For example, no Form
5329, Additional Taxes on Qualified Plans (Including IRAs) and
Other Tax-Favored Accounts, is attached to the return claiming
that the distribution is eligible for any of the exceptions to
the tax enumerated in section 72(t)(2). Accordingly, respondent
issued a notice of deficiency to petitioners in which he
determined that the amount reported on line 16b of petitioners'
2002 return, $25,000, was an early distribution from a qualified
retirement plan which is subject to the 10-percent additional tax
imposed by section 72(t)(1).
During 2001, the year before the year in issue, petitioners
had received a distribution of $12,118 from petitioner's IRA in
the OCTFCU. During that year they had also received four
distributions totaling $76,180 from one or more retirement
accounts with SBC Communication, Inc. (hereinafter referred to as
SBC), of $10,000, $10,000, $12,000, and $44,180. The last
distribution of $44,180 was the balance of a loan from
petitioner's section 401(k) account that was not repaid within 60
days of the termination of petitioner's employment with SBC.
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