1 Unless otherwise indicated, subsequent section

references are to the Internal Revenue Code in effect for the

year in issue, and Rule references are to the Tax Court Rules of

Practice and Procedure.

T.C. Summary Opinion 2005-112

UNITED STATES TAX COURT

JAMES M. AND MARY N. GORSKI, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 4338-04S. Filed August 4, 2005

James M. and Mary N. Gorski, pro sese.

Richard J. Hassebrock, for respondent.

POWELL, Special Trial Judge: This case was heard pursuant

to the provisions of section 74631 of the Internal Revenue Code

in effect at the time the petition was filed. The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.
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2 The record does not contain the exact date in 2001 of

the distribution. 

3 This appears to be a timely filed return, though the

record does not specifically contain information regarding

extension requests.

Respondent determined a deficiency of $2,500 in petitioners’

2001 Federal income tax that was based solely on the failure to

pay the 10-percent additional tax on an early distribution of

$25,000 from an individual retirement account (IRA). After

respondent’s concession that $7,017.01 of the distribution was

used to pay qualified higher education expenses in the taxable

year 2001, the issue is whether petitioners are subject to the

10-percent additional tax under section 72(t)(1) on the remaining

$17,982.99. Petitioners resided in Liberty Township, Ohio, at

the time the petition was filed.

Background

Petitioners received an early distribution of $25,000 from

an IRA in 2001.2 Petitioners were both younger than 59-1/2 at

the time of the withdrawal. Petitioners reported the $25,000 as

income on line 15b of their jointly filed 2001 Form 1040, U.S.

Individual Income Tax Return, which was filed on August 14,

2002.3 Petitioners’ daughter Kathleen enrolled in classes at

Miami University in Oxford, Ohio, in August, 2001.

Respondent determined a deficiency of $2,500 for the taxable

year 2001 based solely on petitioners’ failure to pay the 10-
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percent additional tax on the $25,000 IRA withdrawal. 

Petitioners were able to substantiate, and respondent has

conceded, that $7,017.01 of the IRA distribution was used to pay

qualified higher education expenses in 2001 for Kathleen

consisting of tuition, fees, and room and board. Petitioners

argue that additional expenses totaling $2,684.30 are also

qualified higher education expenses and should not be subject to

the 10-percent additional tax. The disputed $2,684.30 is made up

of the following expenses: (1) $1,585 for a computer; (2) $400

for books; (3) $504.12 for housewares, appliances, and furniture;

and (4) $195.18 for bedding.

Respondent agrees that the expenses for the computer,

housewares, appliances, furniture, and bedding were incurred and

paid in 2001, but argues that they are not qualified higher

education expenses because they were not required by the

university. Respondent argues that the book expense was not

properly substantiated as having been incurred and paid in 2001

for books that were required for Kathleen’s enrollment in

classes. 
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4 Sec. 7491(a), concerning burden of proof, has no

bearing on this case. The issue with respect to the computer,

housewares, appliances, furniture, and bedding expenses is

primarily one of law. Regarding the book expense, sec. 7491(a)

is not applicable because petitioners have not satisfied the

substantiation requirement. Sec. 7491(a)(2)(A).

Discussion4

A. Tax Treatment of Early IRA Distributions

Section 408(d)(1) provides that any amount paid or

distributed out of an individual retirement plan shall be

included in gross income by the distributee in the year of

distribution in the manner provided under section 72. An IRA is

included in the definition of an individual retirement plan. 

Sec. 7701(a)(37). Petitioners properly reported the entire

$25,000 distribution from their IRA as income on their 2001

return. 

Section 72(t)(1) imposes an additional 10-percent tax on

that portion of a distribution from a qualified retirement plan

that is includable in the taxpayer’s gross income, unless the

distribution satisfies an exception found under section 72(t)(2).

An IRA is a qualified retirement plan for purposes of the

additional 10-percent tax. Secs. 72(t)(1), 4974(c)(4). The

additional tax does not apply to distributions from an IRA used

to pay for qualified higher education expenses. Sec.

72(t)(2)(E). Petitioners do not argue that any other exception
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5 An eligible educational institution is any college,

university, vocational school, or other postsecondary vocational

institution that is described in sec. 481 of the Higher Education

Amendments of 1986, Pub. L. 99-498, 100 Stat. 1476. Sec.

529(e)(5); Notice 97-60, sec. 4, 1997-2 C.B. 310, 317-318. 

Respondent does not question, and we assume for the purpose of

this opinion, that Miami University is an eligible educational

institution.

found in section 72(t)(2) applies to their 2001 IRA distribution. 

B. Qualified Higher Education Expenses

For purposes of section 72(t)(2)(E), qualified higher

education expenses are expenses for tuition, fees, books,

supplies, and equipment required for enrollment or attendance at

an eligible educational institution.5 Sec. 529(e)(3)(A). Room

and board may be qualified higher education expenses for students

under guaranteed plans who are at least half-time students. Sec.

529(e)(3)(B). Furthermore, higher education expenses must be for

the education of the taxpayer, the taxpayer’s spouse, or any

child or grandchild of the taxpayer or taxpayer’s spouse. Sec.

72(t)(7). 

1. The Computer 

Neither the Internal Revenue Code nor the applicable

regulations provide specific guidance on whether a computer is a

qualified higher education expense. Petitioners point to

Internal Revenue Service Notice 97-60, 1997-2 C.B. 310, to argue

that a computer is a “necessary tool or equipment” and therefore

is a qualified higher education expense. Notice 97-60 does not,
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however, specifically define “equipment” or address the treatment

of expenses for computers. Notice 97-60, supra. Moreover, the

authoritative sources of Federal tax law are statutes,

regulations, and judicial case law and not informal Internal

Revenue Service sources. See Zimmerman v. Commissioner, 71 T.C.

367, 371 (1978), affd. without published opinion 614 F.2d 1294

(2d Cir. 1979); Green v. Commissioner, 59 T.C. 456, 458 (1972). 

Thus, petitioners’ reliance on Notice 97-60 is misplaced. 

Petitioners’ contention that a computer is included under

the meaning of the word equipment warrants consideration, as the

absence of detail from a statutory text, or Congressional

reluctance to legislate for all possible future situations, does

not mean that Congress thereby intended to adopt a policy

intolerant of adaptive interpretation. Zabolotny v.

Commissioner, 97 T.C. 385, 412 (1991) (citing Deluxe Corp. v.

United States, 885 F.2d 848, 850-851 (Fed. Cir. 1989)), affd. in

part and revd. in part 7 F.3d 774 (8th Cir. 1993). Therefore, it

cannot be said that Congress did not intend a computer to be

considered “equipment” for the purpose of section 72(t)(2)(E). 

Petitioners’ argument loses steam in their assertion that a

computer was “necessary” for Kathleen’s attendance at the

university. According to the Code, the computer must be

“required”. Sec. 529(e)(3). Notwithstanding the absence of

documentation from Miami University stating that it requires
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students to purchase a computer, it cannot be said from this

record that a computer was required for Kathleen’s enrollment in

classes. 

Petitioner James Gorski (Mr. Gorski) testified that there is

a bank of computers available for student use located in the

university’s library. Mr. Gorski admitted that he had not

personally seen the library computers, but that it was his

understanding there were only four or five available for 15,000

students at any time. He further testified that by having her

own computer, his daughter would not have to use these library

computers and risk walking from the library back to her dorm room

late at night. 

Petitioners’ concern for their daughter’s safety, while

understandable, does not prove that the purchase of a computer

was required by Miami University. Mr. Gorski further testified

that professors use an Internet-based system to post syllabi and

course assignments, and that certain university information is

only available over the Internet. He admitted, however, that

Kathleen was not enrolled in any courses that specifically

required her to have her own computer. Furthermore, with

computers available to all students in the library, syllabi and

course assignments are accessible even to students who do not

have their own computers. No matter how necessary petitioners

think Kathleen’s having her own computer may be, the expense of
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one was not required for her enrollment or attendance at Miami

University and is not a qualified higher education expense for

purposes of section 72(t)(2)(E). 

2. Housewares, Appliances, Furniture, and Bedding

Petitioners argue that expenses of $504.12 for housewares,

appliances, and furniture and $195.18 for bedding are qualified

higher education expenses. Petitioners did not specifically

address these items at trial, and from the record it does not

appear that any of these items were required by Miami University

for Kathleen’s enrollment. These expenses are not qualified

higher education expenses for purposes of section 72(t)(2)(E). 

3. Books

Books required for the enrollment or attendance in a course

at an eligible educational institution are qualified higher

education expenses under section 529(e)(3). Petitioners claim

that they spent $400 of the IRA distribution on books for

Kathleen in 2001. Petitioners have not substantiated this

expense as having been incurred and paid in 2001, or that the

books purchased were required for Kathleen’s enrollment or

attendance in courses. Therefore, the claimed $400 expense for

books is not a qualified higher education expense. 
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Conclusion

Petitioners’ additional claimed expenses are not qualified

higher education expenses for purposes of section 72(t)(2)(E). 

Petitioners are therefore liable for the 10-percent additional

tax on the remaining $17,982.99 of their 2001 IRA early

distribution. 

Reviewed and adopted as the report of the Small Tax Case

Division. 

Decision will be entered

under Rule 155.