TAX COURT OPINION

Case: Jennifer G. Davis
Docket Number: 20462-18S
Judge: Carluzzo
Opinion Type: bench
Filed: 12/04/2019
Pages: 5

RMM UNITED STATES TAX COURT WASHINGTON, DC 20217 JENNIFER G. DAVIS, Petitioner, v. ) ) ) ) Docket No. 20462-18S COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Chief Special Trial Judge Lewis R. Carluzzo at Dallas, Texas, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, an appropriate decision will be entered. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. December 4, 2019 SERVED Dec 05 2019 Bench Opinion by Special Trial Judge Lewis R. Carluzzo 3 November 20, 2019 Jennifer G. Davis v. Commissioner of Internal Revenue Docket No. 20462-18S THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion (bench opinion). Section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period, and Rule references are to the Tax Court Rules of Practice and 1 2 3 4 5 6 7 8 9 10 11 12 Procedure. This bench opinion is made pursuant to the 13 authority granted by section 7459(b) and Rule 152. 14 This proceeding for the·redetermination of a 15 deficiency is a small tax case subject to the provisions 16 of section 7463 and Rules 170 through 174. Except as 17 provided in Rule 152(c), this bench opinion shall not be 18 cited as authority, and pursuant to section 7463(b), the 19 decision entered in this case shall not be treated as 20 21 22 precedent for any other case. Petitioner failed to appear for trial, and she has provided no reason to the Court for such failure. 23 Michael S. Navarro appeared on behalf respondent. 24 25 In a notice of deficiency dated September 4, 2018 (notice), respondent determined a deficiency in and cribers · (973)406-2250|operati ns@esÈribebnet|www.escribersmet imposed a section 6651(a)(1) addition to tax with respect 4 to petitioner's 2016 federal income tax. Respondent now c'oncedes the section 4444(a)(1) addition to tax. Ignoring the computational adjustment relating to petitioner's claimed deduction for student loan interest, we must decide whether (1) a distribution from an individual retirement account (IRA) requested and received by petitioner during 2016 is includable in her income for that year, and (2) whether the distribution is subject to the additional tax imposed by section 72(t). At the time the petition was filed, petitioner lived in Texas. During 2016, petitioner received a distribution from an IRA (IRA distribution). Apparently, federal income taxes were withheld from the IRA distribution. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Neither the IRA distribution nor the amount of federal 17 income tax withheld from the distribution are shown on 18 petitioner's 2016 federal income tax return. 19 According to respondent's pretrial memorandum, 20 following.the receipt of the notice and the filing of the 21 petition in this case, the petit'ioner participated in a 22 23 24 25 conference with respondent's Appeals Office. During that conference, petitioner suggested that the distribution was used to help pay for her daughter's medical school expenses, but she offered no documentary support for that cribers 733406-2250|operat nseeieribers.net|vedw.escribers.net suggestion. 5 In general, distributions from an IRA are includable in the taxpayer's income. See secs. 72 and 408(d). Nothing in the record demonstrates that anything less than the full amount of the IRA distribution is includable in petitioner's 2016 income, and respondent's determination that the entire amount of the IRA distribution must be included in her 2016 income is sustained. 1 2 3 4 5 6 7 8 9 10 As relevant here, section 72(t) imposes a 10% 11 additional tax on what are commonly referred to as "early 12 distributions" from qualified retirement accounts, 13 including IRAs. For the most part, "early" means the 14 distribution was received before the recipient was 59 1/2 15 years old, and the evidence in this case shows that 16 petitioner had not attained that age by the close of 2016. 17 18 19 20 In the notice, respondent determined that the section 72(t) additional tax is applicable to the entire amount of the IRA distribution. There are numerous exceptions to the imposition 21 of the section 72(t) additional tax on early distributions 22 from qualified retirement plans or individual retirement 23 plans. Only one is possibly relevant here. In general, 24 and subject to various conditions and limitations, section 25 72(t)(2)(E) provides that a distribution to an individual 73)406-2250|ope ati nseescribersnet|www.escribers.net 6 from an individual retirement plan, which includes a distribution from an IRA, is not subject to the section 72(t) additional tax if the distribution is used "for higher education purposes". Petitioner apparently discussed this exception with respondent's appeals officer, and apparently she was given the opportunity to present such information to respondent's appeals officer. She certainly has had the opportunity to present such information to the Court in this proceeding, but she has not taken the opportunity to do so. In simple terms, she has not met her burden of proving that she is not liable for the section 72(t) additional tax. See Rule 142(a). That being so, it follows that respondent's imposition of the section 72(t) additional tax on the entire amount of the IRA distribution is sustained. To reflect the foregoing, decision will be entered for respondent with respect to the deficiency, and for petitioner with respect to the section 6651(a)(1) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 addition to tax. 20 This concludes the Court's bench opinion this 21 matter. 22 23 24 25 (Whereupon, at 10:52 a.m., the above-entitled matter was concluded.) (973)406-2250loperations@escribers.net|www.escribersaet