                    T.C. Summary Opinion 2007-122



                        UNITED STATES TAX COURT



         ANNA E. AND MARK S. WARRINGTON, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6035-06S.                Filed July 19, 2007.



     Anna E. and Mark S. Warrington, pro sese.

     Ronald S. Collins, for respondent.



     RUWE, Judge:     This case was heard pursuant to the provisions

of section 74631 of the Internal Revenue Code in effect when the

petition was filed.    Pursuant to section 7463(b), the decision to

be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case.


     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
                               - 2 -

     Respondent determined a deficiency of $8,055.90 in

petitioners’ 2004 Federal income tax.    The issue we must decide

is whether petitioners are liable for the 10-percent additional

tax for an early distribution from a retirement account under

section 72(t) in 2004.

                            Background

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

The stipulation of facts and the attached exhibits are

incorporated by this reference.   When the petition was filed,

petitioners resided in West Grove, Pennsylvania.

     During 2004, petitioner Anna Warrington (Ms. Warrington)

was employed by Blue Cross/Blue Shield of Delaware as a customer

service representative.   Ms. Warrington had worked for Blue

Cross/Blue Shield for 10 years.   Apparently due to some problems

involving her daughter, Ms. Warrington began suffering from a

self-characterized “nervous breakdown” in 2004.    This breakdown

caused Ms. Warrington to miss work and, often, left her unable to

leave the house.   Ms. Warrington’s employment with Blue

Cross/Blue Shield was terminated in May 2004.   On June 11, 2004,

MetLife Insurance Co. (MetLife) sent Ms. Warrington a letter

approving her for 1 month of disability benefit payments.

     Although Ms. Warrington had seen a psychiatrist in the past

in relation to her problems with her daughter, Ms. Warrington

felt that the psychiatrist’s treatments were unhelpful.    At some
                                - 3 -

point, Ms. Warrington began seeing a general practitioner, Dr.

O’Brien.   Petitioners submitted medical records dated June 2004

pertaining to Ms. Warrington’s medical treatment during the

relevant timeframe, indicating that she was unable to perform

work.

     Because Ms. Warrington could not work in 2004, her family

suffered from financial problems.    As a result, she withdrew

money from her retirement account in July or August of 2004.     Ms.

Warrington began working in 2005 for Comcast in its customer

service department.    Although she had some setbacks, on December

20, 2005, Ms. Warrington’s physician wrote in his office notes

that Ms. Warrington could return to work without restrictions.

Ms. Warrington earned wages of $7,653 in 2005 and was employed as

of the date of trial.

     Petitioners filed their 2004 joint Federal income tax return

on April 15, 2005.    On the return, petitioners reported income

from pensions and annuities in the amount of $80,559.    Respondent

issued a notice of deficiency, in which he asserted an increase

in tax of $8,055.90 pursuant to section 72(t) for an early

distribution from Ms. Warrington’s retirement account in 2004.

Ms. Warrington was 45 years old in 2004.

                             Discussion

     As a general rule, the Commissioner’s determinations set

forth in a notice of deficiency are presumed correct, and the
                                  - 4 -

taxpayer bears the burden of proving that these determinations

are in error.   Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115

(1933).2

     Section 72(t) provides for an additional tax where a person

under the age of 59-1/2 withdraws money from a qualified

retirement account, unless that person falls within an enumerated

exception.   Section 72(t)(1) and (2) provides in relevant part:

          SEC. 72(t). 10-Percent Additional Tax on Early
     Distributions From Qualified Retirement Plans.--

                (1) Imposition of additional tax.--If any
           taxpayer receives any amount from a qualified
           retirement plan (as defined in section 4974(c)),
           the taxpayer’s tax under this chapter for the
           taxable year in which such amount is received
           shall be increased by an amount equal to 10
           percent of the portion of such amount which is
           includible in gross income.

                (2) Subsection not to apply to certain
           distributions.--Except at provided in paragraphs
           (3) and (4), paragraph (1) shall not apply to any
           of the following distributions:

                        (A) In general.--Distributions which
                are--

                *       *    *    *       *   *   *

                             (iii) attributable to the employee’s
                        being disabled within the meaning of
                        subsection (m)(7),[3]



     2
       Petitioners do not claim that the burden of proof shifts
to respondent under sec. 7491(a).
     3
       Ms. Warrington testified that the qualified plan at issue
was a sec. 401(k) plan. Distributions from a sec. 401(k) plan
are subject to sec. 72(t). See secs. 4974(c)(1), 401(a).
                                - 5 -

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.

      Generally, it is intended that the proof of disability be

the same as where the individual applies for disability payments

under Social Security.    Dwyer v. Commissioner, 106 T.C. 337, 341

(1996) (citing S. Rept. 93-383 at 134 (1974), 1974-3 (Supp.) C.B.

80, 213).

      In Dwyer, we stated:

      The regulations, promulgated pursuant to the statutory
      authorization contained in section 72(m)(7), provide
      that an individual will be considered to be disabled if
      he or she is unable to engage in any “substantial
      gainful activity” by reason of any medically
      determinable physical or mental impairment that can be
      expected to result in death or to be of long-continued
      and indefinite duration. Sec. 1.72-17A(f)(1), Income
      Tax Regs. Significantly, the regulations also provide
      that an impairment which is remediable does not
      constitute a disability. Sec. 1.72-17A(f)(4), Income
      Tax Regs.

Id.

      Petitioners contend that Ms. Warrington was disabled within

the meaning of section 72(m)(7), and that they are therefore

entitled to an exception from the additional tax pursuant to

section 72(t)(2)(A)(iii).    Ms. Warrington testified that her
                                - 6 -

illness was so severe that she was unable to go to work in 2004

and most of 2005.    Indeed, Ms. Warrington’s testimony established

that she and her family suffered financially from her inability

to leave the house and make a living during that period.

However, Ms. Warrington’s testimony and the parties’ stipulations

show that Ms. Warrington’s doctor told her and wrote in his notes

on December 20, 2005, that he believed she would be able to

return to work.    Ms. Warrington was employed during part of 2005

and at the time of trial.

       Notwithstanding the apparent severity of Ms. Warrington’s

illness in 2004, the evidence does not support a conclusion that

her illness fell within the definition of “disabled” as

contemplated by section 72(t) and (m)(7) or the regulations

thereunder.    Ms. Warrington resumed work in 2005 and is now able

to engage in an activity comparable to the one in which she

engaged prior to her illness.    Accordingly, Ms. Warrington fails

to meet the regulatory requirement that an individual be so

impaired as to be unable to engage in a “substantial gainful

activity”, in order to be exempted from the 10-percent additional

tax.    Sec. 1.72-17A(f)(1), (4), Income Tax Regs.   Unfortunately

for petitioners, it is not whether their family was in need of

Ms. Warrington’s retirement money due to Ms. Warrington’s

illness; the question is whether a taxpayer fits within the

technical parameters of a particular law.    In this situation,
                                 - 7 -

petitioners withdrew money from Ms. Warrington’s qualified

retirement plan prematurely and failed to fall within the

exception provided in section 72(t) and (m)(7).

     For the foregoing reasons, we hold that petitioners are

liable for the 10-percent additional tax under section 72(t) on

the early distribution from Ms. Warrington’s qualified retirement

plan in 2004.

     To reflect the foregoing,

                                             Decision will be entered

                                         for respondent.
