                  T.C. Summary Opinion 2006-74



                     UNITED STATES TAX COURT



                CHARLES M. RIDEAUX, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4082-05S.               Filed May 3, 2006.


     Charles M. Rideaux, pro se.

     Monica D. Gingras, for respondent.



     DEAN, Special Trial Judge:    This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code as in effect for the year at issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

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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     Respondent determined a deficiency in petitioner’s Federal

income tax of $6,025.70 for 2003.   The issue for decision is

whether a qualified retirement plan distribution was attributable

to petitioner’s being “disabled” within the meaning of section

72(m)(7), thereby excepting him from liability for the section

72(t) 10-percent additional tax.

                            Background

     The stipulated facts and the exhibits received into evidence

are incorporated herein by reference.    At the time the petition

in this case was filed, petitioner resided in Anaheim,

California.

     Petitioner was employed by Southern California Edison Co.

(Southern Cal) as a boiler mechanic for 20 years.   He worked for

Southern Cal until his retirement in March of 2003.

     As a boiler mechanic, petitioner’s job was to maintain power

generating stations, which required him to engage in “heavy

work”.   When working on a boiler, petitioner was required to lift

large pieces of metal with his coworkers that weighed between

250-300 pounds.   Petitioner’s responsibilities included, among

other things, replacing valves, doing boiler overhauls, welding

on a steel platform on his knees, and constructing parts for

maintenance of the power plant.
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Petitioner’s Medical History

       Petitioner has a history of physical injuries sustained

while working for Southern Cal.    In 1987, petitioner had surgery

for his back.    In 1989, petitioner started to notice pain in his

left shoulder while performing his regular job duties.    The

physician diagnosed him with bursitis (shoulder tendonitis) which

was likely a result of repetitive use of his left upper

extremity, required while lifting, pushing, and pulling heavy

materials, including pumps, valves, flat plates, and other parts

of the boilers.    Since that time, petitioner has been self-

treating with medications as well as applications of heat and

ice.    In 2003, petitioner received an injection of steroids for

his left shoulder to ease the pain.

       In February of 2001, petitioner sustained a work-related

injury to his left knee.    Petitioner had knee surgery, took a

leave of absence, and has not worked since his knee injury in

2001.    Although petitioner has a full range of motion for his

left knee, he suffers pain to his knee with movement and weight

bearing.

       As a result of his knee injury in 2001, petitioner started

having complications with his back, and he received a series of

epidural steroid injections to ease the pain to his lumbar spine.

       In 2003, petitioner was diagnosed with arthritis in the left

knee, lumbar radiculopathy (pain in the lower extremities),

epidural fibrosis of the lumbar spine (scar tissue near the nerve
                               - 4 -
spot), obesity, and a left shoulder rotator cuff tear.    Some of

these physical ailments stemmed from or are related to injuries

that petitioner sustained in earlier years.

     Due to his knee injury, petitioner gained 40 pounds from

inactivity.   His weight exacerbated his knee and back pain, which

hampered his recovery.   Petitioner’s physicians recommended that

he participate in a weight loss program as part of his treatment.

During 2003, petitioner went to physical therapy three times a

week and was required to engage in a home exercise program.

Petitioner was asked to limit his weight bearing, lifting, and

bending activities.   In addition, petitioner went for an

orthopedic reevaluation approximately every 6 weeks to track the

progress of his recovery.

     By letter dated January 20, 2006, petitioner’s primary

treating physician, Dr. Steven Nagelberg, advised that he had

been treating petitioner for work-related injuries from March 14,

2002, to December 10, 2005, for a left rotator cuff tear, left

knee arthritis, and lumbar radiculopathy.   Dr. Nagelberg further

advised that petitioner was considered “temporarily totally

disabled” from March 14, 2002, to December 10, 2005.

Petitioner’s Distribution
     In March of 2003, while petitioner was still on leave,

Southern Cal offered, and petitioner accepted, an early

retirement package.   Petitioner received a lump-sum distribution

of $60,257.49 from the Southern California Edison Co. Benefits
                               - 5 -
Administration (distribution) in 2003.   At the time, petitioner

was 50 years old.

     Petitioner filed a Form 1040, U.S. Individual Income Tax

Return, for 2003, on which he included the distribution as

income.   Petitioner claimed on line 2 of Form 5329, Additional

Taxes on Qualified Plans (including IRAs) and Other Tax-Favored

Accounts, that he was excepted from the additional tax on early

distributions, because the distribution was due to total and

permanent disability.

     On December 13, 2004, respondent issued to petitioner a

statutory notice of deficiency for 2003.   Respondent determined

that petitioner is liable for an additional tax on the

distribution under section 72(t), because his premature

distribution did not meet any of the exceptions enumerated under

section 72(t)(2).

                            Discussion

     Section 72(t)(1) generally imposes a 10-percent additional

tax on premature distributions from “a qualified retirement plan

(as defined in section 4974(c))”, unless the distributions come

within one of the statutory exceptions under section 72(t)(2).

One of the exceptions listed is a distribution attributable to

the employee’s being disabled within the meaning of section

72(m)(7).   Sec. 72(t)(2)(A)(iii).
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     The legislative purpose underlying the section 72(t) tax is

that “‘premature distributions from IRAs frustrate the intention

of saving for retirement, and section 72(t) discourages this from

happening’”.   Arnold v. Commissioner, 111 T.C. 250, 255 (1998)

(quoting Dwyer v. Commissioner, 106 T.C. 337, 340 (1996)); S.

Rept. 93-383, at 134 (1974), 1974-3 C.B. (Supp.) 80, 213.

     Respondent argues that petitioner’s periodic professional

consultations with physicians for lower back pain and arthritis

in the left knee do not constitute “disabled” within the meaning

of section 72(m)(7).1

     Section 72(m)(7) provides:

          (7) Meaning of disabled.-- For purposes of this
     section, an individual shall be considered to be
     disabled if he is unable to engage in any substantial
     gainful activity by reason of any medically
     determinable physical or mental impairment which can be
     expected to result in death or to be of long-continued
     and indefinite duration. An individual shall not be
     considered to be disabled unless he furnishes proof of
     the existence thereof in such form and manner as the
     Secretary may require.




     1
          The Commissioner’s determinations are presumed correct,
and generally taxpayers bear the burden of proving otherwise.
Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Under section 7491, the burden of proof shifts from the taxpayer
to the Commissioner if the taxpayer produces credible evidence
with respect to any factual issue relevant to ascertaining the
taxpayer’s tax liability. Sec. 7491(a)(1). Petitioner does not
argue that the burden of proof should be shifted to respondent
under section 7491. Regardless of whether the sec. 72(t)
additional tax is an “additional amount” to which sec. 7491(c)
would apply, petitioner has met his burden of showing that he was
disabled at the time of the distribution.
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     The determination of whether a taxpayer is disabled is made

with reference to all the facts of the case.     See sec. 1.72-

17A(f)(2), Income Tax Regs.   The regulations also set forth

general considerations upon which a determination of disability

is to be made, such as the nature and severity of the impairment.

See sec. 1.72-17A(f)(1), Income Tax Regs.

     The regulations emphasize that the “substantial gainful

activity” to which section 72(m)(7) refers is the activity, or a

comparable activity, in which the individual customarily engaged

prior to the arising of the disability.     See Dwyer v.

Commissioner, supra at 341; sec. 1.72-17A(f)(1), Income Tax Regs.

Therefore, the impairment must be evaluated in terms of whether

it does, in fact, prevent the individual from engaging in his

customary, or any comparable, substantial gainful activity

considering the individual’s education, training, and work

experience.   Sec. 1.72-17A(f)(1), Income Tax Regs.

     Respondent argues that on box 7 of Form 1099-R,

Distributions From Pensions, Annuities, Retirement or Profit-

Sharing Plans, IRAs, Insurance Contracts, etc., issued by

Southern Cal, the distribution was classified as an “early

distribution, no known exception”.     Petitioner affirmatively

claimed on line 2 of Form 5329, Additional Taxes on Qualified

Plans (including IRAs) and Other Tax-Favored Accounts, that he

was excepted from the additional tax, because the distribution
                                - 8 -

was due to total and permanent disability.     The Court finds that,

despite the distribution classification on the Form 1099-R,

petitioner has provided sufficient evidence to show that he was

disabled at the time of the distribution.

     Prior to petitioner’s knee injury, his position as a boiler

mechanic at the power plant required him, with assistance from

his coworkers, to repeatedly lift heavy objects and to be on his

knees for certain tasks, such as welding on a platform.

According to the medical evaluations from petitioner’s physicians

during 2003, petitioner experienced pain whenever he moved or

shifted weight onto his left knee.      As a result, petitioner was

unable to return to work, because he could not lift heavy

objects.   Even had petitioner not retired, the evidence shows

that petitioner’s injuries were such that he could no longer

perform his job.   See Brown v. Commissioner, T.C. Memo. 1996-421

(finding that petitioner was “disabled” since he could not climb

ladders, or otherwise lift heavy objects, or “walk beams”,

because his position as a project engineer required him to be

substantially mobile and physically fit).

     The term “indefinite” under section 72(m)(7) means that it

cannot reasonably be anticipated that the impairment will, in the

foreseeable future, be so diminished as no longer to prevent

substantial gainful activity.    Sec. 1.72-17A(f)(3), Income Tax

Regs.   For example, an individual who suffers a bone fracture
                               - 9 -

which prevents him from working for an extended period of time

will not be considered disabled if his recovery can be expected

in the foreseeable future; if the fracture persistently fails to

knit, the individual would ordinarily be considered disabled.

Id.

      An impairment which is remediable does not constitute a

disability.   Sec. 1.72-17A(f)(4), Income Tax Regs.   An individual

will not be deemed disabled if, with reasonable effort and safety

to himself, the impairment can be diminished to the extent that

the individual will not be prevented by the impairment from

engaging in his customary or any comparable substantial gainful

activity.   Id.

      Although petitioner went to physical therapy sessions and

received steroid shots for his pain, petitioner remained on leave

and was unable to work.   Petitioner received treatments to his

knee for at least 4 years after his injury in 2001.   Moreover,

petitioner’s lower back pain, in part triggered by his knee

injury, stemmed from injuries sustained earlier in his career as

a boiler mechanic.   These longstanding injuries are comparable to

a bone fracture that persistently fails to knit as set forth by

the example in the income tax regulations.

      According to a letter from petitioner’s primary treating

physician, petitioner was considered “temporarily totally

disabled” for the entire period under his care, from March 14,
                                - 10 -

2002, to December 10, 2005.   The resolution of whether petitioner

was “disabled” within the meaning of section 72(m)(7) now turns

upon a narrow question of fact--whether petitioner’s injuries

were temporary or indefinite?

     There is a dearth of cases interpreting and analyzing the

term “indefinite” under section 72(m)(7) and section 1.72-

17A(f)(3), Income Tax Regs.   There is, however, in the context of

a taxpayer who seeks deductions for certain expenses incurred

while away from home under section 162(a)(2), a well-established

body of caselaw that has analyzed and contrasted the concepts of

“temporary” and “indefinite”.    See Peurifoy v. Commissioner, 358

U.S. 59, 60-61 (1958); Neal v. Commissioner, 681 F.2d 1157, 1159

(9th Cir. 1982) (following Kasun v. United States, 671 F.2d 1059

(7th Cir. 1982)), affg. T.C. Memo. 1981-407; Stricker v.

Commissioner, 54 T.C. 355, 361-362 (1970), affd. 438 F.2d 1216

(6th Cir. 1971).   They lend guidance to the interpretation of

“indefinite” in this case.

     An employment is for an indefinite duration if its

termination is not foreseeable or is not reasonably expected to

be foreseen within a fixed or reasonably short period of time.

Mitchell v. Commissioner, 74 T.C. 578, 581-582 (1980); Stricker

v. Commissioner, supra at 361; White v. Commissioner, T.C. Memo.

1984-128; Duley v. Commissioner, T.C. Memo. 1979-262.
                              - 11 -

     The mere labeling or designation of a job as “temporary” is

not determinative; the duration of a job is indefinite if

termination is not foreseeable within a short period of time.

Garlock v. Commissioner, 34 T.C. 611 (1960); Allison v.

Commissioner, T.C. Memo. 1986-346.     Moreover, employment that was

temporary in its inception may become indefinite due to change in

circumstances, or simply by the passage of time.    See Mitchell v.

Commissioner, supra at 581; Norwood v. Commissioner, 66 T.C. 467,

469-470 (1976); Kroll v. Commissioner, 49 T.C. 557, 562 (1968);

Moxey v. Commissioner, T.C. Memo. 1988-156.

     Similarly, although petitioner’s injuries were labeled as

“temporary”, there was no reasonable indication, nor could it be

reasonably anticipated or be foreseen at the time of the

distribution in 2003, when or if petitioner would be able to

return to work.   Even if petitioner’s injuries were “temporary”

initially, over time, they became indefinite.    The inability to

predict when petitioner would be able to return to work, if ever,

caused the disability to be indefinite within the meaning of

section 72(m)(7) and section 1.72-17A(f)(3), Income Tax Regs.

See Brown v. Commissioner, supra.

     The Court finds that petitioner’s physical injuries, which

were of a long-continued and indefinite duration, prevented him

from engaging in his customary or any comparable substantial

gainful activity.   Accordingly, petitioner was disabled within
                             - 12 -

the meaning of section 72(m)(7), and the distribution is not

subject to the 10-percent additional tax under section 72(t).

     Reviewed and adopted as the report of the Small Tax Case

Division.


                                        Decision will be entered

                                   for petitioner.
