TAX COURT OPINION

Case: Devon Leigh Sando
Docket Number: 21301-08S
Judge: Colvin
Opinion Type: bench
Filed: 06/29/2009
Pages: 5

UNITED STATES TAX COURT WASHINGTON, D.C. 2021 7 DEVON LEIGH SANDO, PETITIONER, Petitioner, v . COMMISSIONER OF INTERNAL REVENUE, Respondent . O R D E R SZRVICE Pursuant to Rule 152(b), Rules of Practice and Procedure of this Court, 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 of the above case before Jude Diane L . Kroupa at San Francisco on June 16, 2009, containing her oral finding os fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, an appropriate decision will be entered for respondent . (Signed ) Diane L. Kroupa Judg e Dated : Washington, D .C . June 29, 2009 SERVED JUN 2 9 2009 3 1 Bench Opinion by Judge Diane Kroupa June 16, 2009 2 Devon Leigh Sando vs . Commissioner Docket No . 21301-08S 3 THE COURT : The Court has decided to render ora l 4 findings of fact and opinion in this case, and the following 5 represents the Court's oral findings of fact and opinion . 6 These oral findings of fact and opinion shall not be relied 7 upon as precedent in any other case . 8 This proceeding was heard as a small tax case, 9 pursuant to the provisions of section 7463 and Rules 170 10 through 175 . All section references are to the Interna l 11 Revenue Code for the year 2005, which year shall be referred 12 to as the year at issue . And all rules references are t o 13 the Tax Court Rules of Practice & Procedure . 14 This bench opinion is made pursuant to the 15 authority granted by section 7459(b) and Rule 152 . 16 Devon Sando appeared on his own behalf, and John 17 Wall appeared on behalf of Respondent . 18 FINDINGS OF FAC T 19 Petitioner was employed by the California 20 Department of Corrections & Rehabilitation since 2003 , 21 including the year at issue of 2005 . Petitioner was also an 22 active participant in the California Public Employee s 23 Retirement System, an employer-sponsored retirement plan 24 provided by his employer, the State of California , 25 Petitioner opened a personal IRA with Washington Heritage Reporting Corporatio n (202) 628-4888 4 1 Mutual Financial Services, Inc ., and contributed $4000 t o 2 the account . Petitioner also rolled over $427 into the IRA 3 from another personal IRA in a tax-free transfer . 4 The State of California issued Petitioner a form 5 W-2, wage and tax statement, showing Petitioner was a n 6 active participant in its retirement plan . The W-2 also 7 showed Petitioner earned $94,894 of wages in 2005 . 8 Petitioner filed a federal income tax return for 9 2005 as single, reporting an adjusted gross income of 10 $90,894 after deducting the $4000 contribution to the 11 Washington Mutual IRA . 12 Respondent issued a statutory deficiency notice to 13 Petitioner, dated July 29th, 2008, determining a $102 5 14 deficiency in Petitioner's federal income tax by disallowing 15 the $4000 IRA contribution . 16 Petitioner timely filed a petition to contest the 17 deficiency determination . At the time he filed th e 18 petition, Petitioner resided in California . 19 OPINION 20 The sole issue for decision is whether Petitioner 21 may deduct the $4000 contribution to an individua l 22 retirement account under section 219(a) for 2005 . 23 Generally, a taxpayer is entitled to deduct amount s 24 contributed to an IRA . Sec . 219(a) ; sec . 1 .219-1(a), Income 25 Tax Regs . Heritage Reporting Corporation (202) 628-4888 1 The amount allowable as a deduction, however, may 2 not exceed the -deductible amount' which is limited wher e 3 the taxpayer is for any part of the taxable year an active VA VW'_ 4 . participant in a retirement plan established for it s It 5 5 employees by a state . Sec . 219(g) (5) (A) (iii) . C') A 6 For a single taxpayer, as Petitioner, the 7 "deductible amount"is reduced using a ratio determined b y 8 dividing the excess of the taxpayer's modified adjuste d 9 gross income over the 'applicable dollar amount' by $10,000 . 10 Sec . 219(g) (2) (A) . 11 The 'applicable dollar amount' for 2005 is 12 $50,000 . Sec . 219(g) (3) (B) (ii) . 13 This provision results in a total disallowance of 14 the IRA deduction where the total modified AGI exceed s 15 $60,000 . Ho v . Commissioner , TC Memo 2005-133 . 16 In other words, the taxpayer's IRA contribution 17 deduction starts to phase out when the modified AGI i s 18 $50,000 and the deduction is completely phased out when the 19 modified AGI exceeds 60,000 . 20 The record establishes that Petitioner was an 21 employee of the California Department of Corrections & 22 Rehabilitation in 2005 . Petitioner was also an active ' 23 participant in a retirement plan established by the State of 24 California for its employees under section 219(g) (5) (A) (iii) 25 in 2005 . Heritage Reporting Corporation (202) 628-4888 6 1 Petitioner filed a return for 2005 and ha d 2 modified AGI of $94,894, which exceeds the $60,000 phase-out 3 amount for 2005 . Petitioner does not dispute the law . H e 4 asserts, however, that the code is confusing and that it is 5 unfair that single taxpayers who earn more than $60,000 in 6 2005 are denied an IRA contribution deduction . 7 The law is the law . My job is to apply the law to 8 the facts . I find that the law denies Petitioner an IRA 9 contribution deduction in 2005 . 10 To reflect the foregoing, decision will be entered 11 for Respondent . 12 This concludes the Court's oral findings of fact 13 and opinion in this case . 14 (Whereupon, at 6 :02 p .m ., the bench opinion in the 15 above-entitled matter was concluded . ) 16 17 18 19 20 21 22 23 2 4 25 Heritage Reporting Corporation (202) 628-4888