                        T.C. Memo. 2007-90



                      UNITED STATES TAX COURT



           ROGER F. & MARY A. DURONIO, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 13719-04.             Filed April 17, 2007.



     Roger F. Duronio and Mary A. Duronio, pro sese.

     Joseph J. Boylan, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION

     SWIFT, Judge:   Respondent determined a $9,483 deficiency

(including a $1,990 10-percent additional tax under section

72(t)(1)) in petitioners’ Federal income tax for 2002 and a

$1,897 section 6662(a) accuracy-related penalty.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue, and
                              - 2 -
all Rule references are to the Tax Court Rules of Practice and

Procedure.

     The sole issue for decision is whether petitioners qualify

for an exception under section 72(t)(2)(E) to a section 72(t)(1)

10-percent additional tax with respect to an early distribution

from an individual retirement account (IRA).


                        FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

     At the time the petition was filed, petitioners resided in

Bogota, New Jersey.

     During the 2002 spring and fall semesters, petitioners’ son

attended New York University (NYU) full time and resided in an

NYU dormitory.

     In December of 2001, apparently out of family savings and

resources, petitioners made an $18,000 tuition payment to NYU on

behalf of their son.

     In the fall of 2002, to finance his educational expenses,

petitioners’ son obtained a $19,263 student loan.

     In 2002, neither petitioners nor their son made any

repayments on the above student loan, and petitioners did not

make tuition payments on behalf of their son.

       Sometime in 2002, petitioner Mary Duronio received a

$19,900 early distribution from her IRA.   At the time of the

distribution Mary had not attained age 59-1/2.
                              - 3 -
     On petitioners’ timely filed 2002 joint Federal income tax

return, petitioners reported Mary’s entire $19,900 early IRA

distribution as taxable, but petitioners did not calculate

thereon a section 72(t)(1) early distribution 10-percent

additional tax.

     On audit, respondent determined that the section 72(t)(1)

10-percent additional tax applied to Mary’s $19,900 early IRA

distribution.


                             OPINION

     In general, a distribution from an IRA to a taxpayer prior

to the taxpayer attaining age 59-1/2 is subject to a 10-percent

additional tax on the taxable amount of the early distribution.

Sec. 72(t)(1).

     Among other exceptions not here relevant, a taxpayer may be

able to reduce the amount of an early distribution from an IRA

that is subject to the 10-percent additional tax by the amount of

a taxpayer’s qualified higher educational expenses paid in the

year of the early distribution (educational exception).1   Sec.

72(t)(2)(E).

     Generally, tuition, fees, books, supplies, equipment, and,

in some circumstances, room and board relating to attendance by a



     1
       The sec. 72(t)(2)(E) higher educational exception applies
only to qualified plans that meet the sec. 7701(a)(37) definition
of an individual retirement plan, i.e., individual retirement
accounts and individual retirement annuities.
                               - 4 -
taxpayer and a taxpayer’s children at an eligible educational

institution qualify as educational expenses.   Sec. 72(t)(7); sec.

529(e)(3)(A) and (B).

     Petitioners argue that because money is fungible

petitioners’ December 2001 $18,000 NYU tuition payment for their

son should be deemed to have been funded not in 2001 but in 2002

by the $19,900 early IRA distribution Mary received.    Petitioners

also appear to argue that they guaranteed their son’s 2002

$19,263 student loan and that petitioners’ loan guarantee should

be treated as a $19,263 payment on their son’s educational

expenses.

     Petitioners also allege that in 2002 petitioners paid other

miscellaneous educational expenses of their son.

     We reject petitioners’ arguments.

     Petitioners’ December 2001 $18,000 tuition payment for their

son may have necessitated Mary’s $19,900 2002 early IRA

distribution.   However, qualified higher educational expenses

paid in a year other than the year of an early IRA distribution

do not reduce the amount of the early distribution subject to the

10-percent additional tax.   See Lodder-Beckert v. Commissioner,

T.C. Memo. 2005-162.

     Because petitioners have not produced credible evidence that

they guaranteed the $19,263 student loan their son obtained in

2002, we do not address the merits of petitioners’ argument that
                                 - 5 -
the alleged loan guarantee should be treated as a payment of

their son’s educational expenses.    Further, petitioners have not

established that in 2002 petitioners paid any of their son’s

other educational expenses.

     The Court suggested that petitioners contact NYU officials

to obtain documentation relating to their son’s student loans and

educational expenses.   None has been provided.

     Because petitioners have not established that in 2002 they

paid qualified educational expenses, petitioners are liable for

the $1,990 10-percent additional tax on the $19,900 early IRA

distribution Mary received.

     To reflect the foregoing,


                                         Decision will be entered

                                 under Rule 155.
