                     T.C. Summary Opinion 2005-93



                       UNITED STATES TAX COURT



               MALIA KRISTY AMBATA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19572-04S.             Filed July 19, 2005.



     Malia Kristy Ambata, pro se.

     Robert V. Boeshaar, for respondent.



     COHEN, Judge:    This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

at the time that the petition was filed.    The decision to be

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

should not be cited as authority.    Unless otherwise indicated,

all section references are to the Internal Revenue Code in effect

for the year in issue.
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     Respondent determined a deficiency of $1,720 in petitioner’s

Federal income tax for 2002.   The issue for decision is whether

petitioner’s higher education expenses incurred in 2003 and 2004

can be applied to reduce the amount of a distribution in 2002

subject to the 10-percent additional tax of section 72(t)(1).

                             Background

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioner resided in Spokane, Washington, at the time that she

filed her petition.

     Petitioner withdrew $17,200 from her individual retirement

plan with Putnam Investments (Putnam) in 2002.   Petitioner

planned to use the money for college expenses.   However,

petitioner did not enroll in college until 2003.

     Petitioner timely filed Form 1040A, U.S. Individual Income

Tax Return, for 2002.   Petitioner reported the $17,200

distribution from Putnam; however, she did not report the 10-

percent additional tax under section 72(t)(2)(E).   The IRS

determined that petitioner received an early distribution from

her qualified retirement plan and that the taxable amount of

this early distribution was subject to a 10-percent additional

tax on the taxable amount.
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                             Discussion

     Under section 72(t), a 10-percent additional tax is imposed

on early distributions from a qualified retirement plan for the

taxable year in which the taxpayer receives the early

distribution.   Petitioner does not dispute that she received an

early distribution from a qualified retirement plan in 2002.

     The 10-percent additional tax, however, does not apply to

certain distributions.   Sec. 72(t)(2).   Section 72(t)(2)(E)

provides that the 10-percent additional tax on early

distributions does not apply to “Distributions to an individual

from an individual retirement plan to the extent such

distributions do not exceed the qualified higher education

expenses * * * of the taxpayer for the taxable year.”    An

individual retirement plan is defined as an individual retirement

account and an individual retirement annuity (collectively IRA)

described in section 408(a) and (b), respectively.

Sec. 7701(a)(37).   Qualified higher education expenses for

purposes of section 72(t)(2)(E) are defined by section 529(e)(3).

Sec. 72(t)(7)(A).

      The parties stipulated that petitioner’s distribution was

from an IRA.    Additionally, respondent concedes that petitioner

incurred qualified higher education expenses in 2003 and 2004.

Petitioner contends that the higher education expenses incurred
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in 2003 and 2004 should be used to reduce the amount of the

distribution subject to the 10-percent additional tax in 2002.

     Under the express language of the statute, the qualified

higher education expenses must be incurred by the taxpayer in the

taxable year of the distribution.    Sec. 72(t)(2)(E); Beckert v.

Commissioner, T.C. Memo. 2005-162.       We have found no exception to

this requirement.   Accordingly, petitioner’s higher education

expenses incurred in 2003 and 2004 cannot be applied to reduce

the amount of the distribution in 2002 subject to the 10-percent

additional tax.

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
