TAX COURT OPINION

Case: William Nicholas Chapler
Docket Number: 10613-07S
Judge: Colvin
Opinion Type: bench
Filed: 07/14/2008
Pages: 6

UNITED STATES TAX ; COURT WASHINGTON, DC 2021 7 SERVICE WILLIAM NICHOLAS CHAPLER , Petitione r v . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R - 11 Pursuant to Rule 152 (b),, Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Cou to petitioner and to respondent a copy transcript of the hearing in the above P . Ruwe at Cleveland, Ohio, on June 16 findings of fact and opinion renderedl trial. i rt shall transmit herewith of the pages of th e case before Judge Robert 2008, containing his oral 01 at the conclusion of th e In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed ) Robert P. Ruwe Judge Dated : Washington, D .C . July 14, 2008 I 1 Bench Opinion by Senior Judge Robert P . Ruwe 2 June 18, 200 8 3 William Nicholas Chapler 10613-07 S 3 5 The Court has decided to render Oral Findings of 6 Fact and opinion in this case and the following represents 7 the Court's Oral Findings of Fact and .Opinion . These Oral . Findings of Fact and opinion shall not be relied upon as precedent in any other case . } 10 This proceeding was herd as a small tax cas e 11 pursuant to the provisions of Section 7463 of the Interna l 12 Revenue Code and Rules 170 through 175 of the Tax Court 13 Rules of Practice and Procedure . 14 This Bench opinion is made pursuant to the 15 authority granted by Section 745 (b) of the Internal Revenu e 16 Code, as amended, and Rule 152 of the Tax Court Rules .of 17 Practice and Procedure . 18 William Chapler appeared on his behalf . 19 Respondent determined a deficiency in Petitioner's income 20 tax for the year 2004 in the amount of $5,343 .20, based on 21 Section 727 which imposes a loo additional tax on prematur e (f) RPM, 22 distributions from qualified retirement plans . 23 The only issue is whether Petitioner is liable for 24 the 10o additional tax . Some of the facts have bee n 25 stipulated and are so found . Heritage Reporting Corporation (202) 628= 4888 1 Petitioner timely file his federal income tax 2 return for 2004, on which he reported a taxable IR A 3 distribution of $50,000 and a taxable pension and annuity 4 income of $3,432 that he received in 2004 when he was 3 9 5 years old . 6 Petitioner did not report the Section 7 2 7 additional tax on his 2004 return . (+) RPR. 8 Attached to Petitioner s 2004 return is Form 532 9 in which Petitioner explained that he did not'report the 100i 10 additional tax on the $53,432 in distributions becaus e 11 "taxpayer needed .to avoid creditfcard bankruptcy . " 12 At trial, Petitioner testified that he needed the 13 distributions because of financial difficulties an d 14 basically argued that the lack of any exception to the 15 imposition of the Section 72 additional tax was unfair . 16 However, the perceived 17, the law ' s application to Petitioner's financial situation 18 cannot be a basis for exempting Petitioner from th e 19 additional tax . 20 The only statutory exception to the loo additional 21 tax that Petitioner claims is the one for distribution s 22 contained in Section 72(2)( iii) . Petitioner claims tha t (o Am 23 the distributions in question were attributable to his being 24 disabled . 25 In his petition, Petitioner claims that he Heritage Reporting Corporatio n (202) 628=4888 5 1 severely injured his thumb in July 2003 and that this and a 2 hernia-operation disabled him from work until September 2003 3 and that this disability led to his aforementioned financial 4 difficulties . 5 Petitioner testified that his thumb injury led to .6" his inability to perform the same type of work that he ha d 7 previously engaged in . However, the thumb injury did no t 8 prevent Petitioner's gainful employment in the future . 9 Section 721(2)(iii) provides that the 10 0 10 additional tax shall not apply to a distributio n 11 "attributable to the employee's being disabled within the 12 meaning of sub-section (m)(7) . " 13 Section 72(m)(7) provides that for purposes of 14 this section, an individual shall be considered to be 15 disabled if he is unable to engage in any substantia l 16 gainful activity by reason of any medically determinable 17 physical or mental impairment which can be expected t o 18 result in death or to be of long continued and indefinit e 19 duration . An individual shall not be considered to b e 20 disabled unless he furnishes proof of the existence thereof 21 in such form and manner as the Secretary . may require . . 22 Generally it is intended that the proof o f 23 disability be the same as where an individual applies fo r 24 disability payments under Social Security . See, Dwyer v 25 Commissioner , 106 TC 337,W- 3 4K1 (1996) . Heritage Reporting Corporation (202) 628 7 4888 6 1 . In Dwyer, we stated ashfollows : "The regulations 2 promulgated pursuant to statutory authorization contained in 3 Section 72 (7)provide that an individual will be considered 4 to be disabled if he or she is unable to engage in an y 5 substantial gainful activity by reason of any medically 6 determinable physical or mental impairment that can b e 7 expected to result in death or .to be of long, continued and 8 indefinite duration . Significantly, the regulations als o 9 provide that an impairment which Cis r does no t 10 constitute a disability . " 11 Based on the evidence presented, we find that 12 Petitioner was . not disabled within the meaning of Section 13 74 (2)(iii) because he was not unable to engage i n 2 14 substantial gainful activity for any extended period of 15 time . 16 Petitioner has not alleged or proven any othe r 17 exception to the loo additional t ax . Therefore, we hol d 18 that he is liable for the 10% additional tax under Section . (~~ h2PR 19 7 2 ' ' 1 ) 20 Decision will be entered for Respondent . This 21 concludes the .Court's oral Findings of Fact and Opinion . 2 2 23 // 2 4 25 Heritage Reporting, Corporation (202) 628-4888 1 2 3 THE COURT : And we will take a recess . THE CLERK : All rise . (Whereupon, at 10 :34 a ;.m ., the bench opinion i n 4 the above - entitled matter was concluded .) 7 5 6 7 9 10 11 / / 12 13 14 15 / / 16 17 18 19 20 / / 21 22 // 2 3 2 4 25 Heritage Reporting;: Corporation (202) 628-4888