                        T.C. Memo. 2007-306



                      UNITED STATES TAX COURT



                DAVID BRIAN NOLAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8739-06.               Filed October 9, 2007.



     David Brian Nolan, pro se.

     Ann M. Welhaf and Michael A. Raiken, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   Respondent determined a deficiency in

petitioner’s 2003 Federal income tax of $2,195.1   After



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

concessions,2 the issue for decision is whether $3,480 in taxable

distributions from petitioners’s individual retirement account

(IRA) is subject to the 10-percent additional tax under section

72(t).

                          FINDINGS OF FACT

     Petitioner resided in Alexandria, Virginia, when the

petition was filed.

     Petitioner was born in 1951.     In 2003, he received $21,950

in distributions from an IRA.   Petitioner used the proceeds

during 2003 to help pay $18,470 in college expenses on behalf of

his sons David and John Nolan and $15,525 in tuition and fees to

Randolph-Macon Academy on behalf of a third son, Christopher

Nolan.   Christopher was enrolled in the ninth grade at Randolph-

Macon Academy, a private high school that prepares students for

college and the military.   Christopher is scheduled to receive

his high school diploma from Randolph-Macon Academy in 2007.

     On February 8, 2006, respondent issued petitioner a notice

of deficiency for 2003.   Respondent determined that petitioner

was liable for additional tax of $2,195 on the early

distributions from his IRA.



     2
      Respondent conceded that petitioner is not liable for the
10-percent additional tax to the extent of $18,470 used to pay
qualified higher education expenses on behalf of petitioner’s
children David and John Nolan. The expenses consisted of: (1)
$15,500 to Mount Olive College; (2) $2,556 to George Mason
University; and (3) $415 to Northern Virginia Community College.
                                 -3-

       Petitioner is an attorney and has been admitted to practice

before this Court since 1981.    He did not cooperate with

respondent in preparation of the trial, and he disobeyed our

orders and Rules on numerous occasions.    On October 24, 2006, the

Court issued a standing pretrial order to petitioner.     The order

required petitioner to stipulate all facts to the maximum extent

possible and to exchange with respondent all documents he

intended to present for trial at least 14 days before the date of

trial, March 26, 2007.    Petitioner ignored the order.   He

refused, even to the day of trial, to stipulate any facts.

       On October 31, 2006, respondent’s attorney sent petitioner

an informal request for production of documents.     Petitioner

ignored the request.    On December 6, 2006, respondent again

requested the production of documents.    Again petitioner ignored

the request.    On February 2, 2007, respondent filed with the

Court a motion to compel production of documents and a motion to

compel responses to respondent’s interrogatories.     On February 9,

2007, we granted respondent’s motions, requiring petitioner to

answer respondent’s interrogatories in full and to produce each

and every document requested on or before March 10, 2007.      We

also warned petitioner that if he did not fully comply with our

orders, we would be inclined to impose sanctions pursuant to Rule

104.    Petitioner did not comply with our orders.   He did not
                                 -4-

answer any of respondent’s interrogatories.     He produced no

documents.

     On March 26, 2007, because of petitioner’s refusal to answer

respondent’s interrogatories and to produce the requested

documents, we granted a motion in limine precluding petitioner

from introducing any evidence that was not furnished to

respondent on or before March 10, 2007.    After a conference call

with the parties, we vacated the motion, allowing petitioner the

opportunity to present his documentary evidence.     On the morning

of trial, March 30, 2007, petitioner presented documents to

respondent’s counsel which substantiated the payment of education

expenses for his children.    Respondent made concessions relating

to some of those expenses.    Petitioner should have presented this

evidence during the 6 months he had to prepare for trial, as

repeatedly ordered by the Court.

     At trial, we admonished petitioner for failing to obey

numerous orders and for wasting the Court’s time.     At the close

of trial, we ordered the parties to submit opening briefs by May

29, 2007.    Petitioner did not file a brief.   We showed petitioner

extraordinary leniency by allowing him to present evidence

despite his repeated failure to obey our orders.     In response to

our leniency, petitioner once again ignored our Rules and our

order.
                                -5-

      On account of petitioner’s repeated failure to obey our

Rules and orders, we considered dismissing this case as a

sanction pursuant to Rule 123(b).     See Stringer v. Commissioner,

84 T.C. 693, 704-705 (1985), affd. without published opinion 789

F.2d 917 (4th Cir. 1986); Lopez v. Commissioner, T.C. Memo. 2001-

93.   However, after respondent’s concessions, the only issue for

decision is whether petitioner is liable for the section 72(t)

additional tax with respect to $3,480 in early distributions from

his IRA.   As petitioner is clearly liable for the additional tax,

we will address the issue on the merits.

                              OPINION

      Respondent determined that under section 72(t)(1) petitioner

is liable for a 10-percent additional tax on early distributions

from his IRA.   Petitioner bears the burden of proving that

respondent erred in making this determination.    See Rule 142(a).

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

early distributions from qualified retirement plans, which

includes an IRA as defined in section 408(a) and (b).3    Secs.

72(t)(1), 4974(c).   However, the section 72(t) additional tax

does not apply to certain distributions from qualified retirement

plans, including distributions used for qualified higher




      3
      Petitioner does not dispute that the IRA is a qualified
retirement plan for purposes of sec. 72(t).
                                 -6-

education expenses, and distributions used for certain medical

expenses.    Sec. 72(t)(2)(A), (B), (E).

Higher Education Expenses

     Petitioner argued at trial that tuition and fees paid to

Randolph-Macon Academy on behalf of his son are qualified higher

education expenses and, therefore, the additional tax does not

apply to the IRA distributions pursuant to section 72(t)(2)(E).

This issue turns on whether Randolph-Macon Academy is an eligible

educational institution as defined in section 529(e)(5).

     Qualified higher education expenses include tuition, fees,

books, and supplies.    Sec. 529(e)(3).    The expenses must be for

education furnished to the taxpayer, the taxpayer’s spouse, or

any child or grandchild of the taxpayer or the taxpayer’s spouse.

Sec. 72(t)(7)(A).    Furthermore, the education must be furnished

at an eligible educational institution.     Secs. 72(t)(7)(A),

529(e)(3).    Section 529(e)(5) defines “eligible educational

institution.”

          (5) Eligible educational institution.-- The term
     “eligible educational institution” means an
     institution--

                 (A) which is described in section 481 of the
            Higher Education Act of 1965 (20 U.S.C. 1088), as
            in effect on the date of the enactment of this
            paragraph, and

                 (B) which is eligible to participate in a
            program under Title IV of such Act.
                                -7-

     Paragraph (5) of section 529(e) was added pursuant to the

Taxpayer Relief Act of 1997, Pub. L. 105-34, sec. 211(b)(2), 111

Stat. 810, which was passed on August 5, 1997.   Institutions

described in section 481 of the Higher Education Act of 1965, 20

U.S.C. section 1088, as in effect on August 5, 1997, are

accredited colleges, universities and other postsecondary

schools.   Title IV of the Higher Education Act of 1965, 20 U.S.C.

section 1070, et seq., as in effect on August 5, 1997, authorizes

the Department of Education to provide scholarships, grants, and

reduced-interest loans to students attending eligible

institutions of higher education.

     Thus, eligible educational institutions under section

529(e)(5) are colleges, universities, and other postsecondary

institutions which are eligible to participate in a student aid

program administered by the Department of Education.    The term

includes virtually all accredited public, nonprofit, and

proprietary postsecondary institutions.   Sec. 1.25A-2(b), Income

Tax Regs.; Notice 97-60, sec. 4, 1997-2 C.B. 310, 317-318.    Only

postsecondary schools may be eligible educational institutions;

therefore, elementary schools and secondary schools4 do not

qualify.



     4
      A secondary school is “a school intermediate between
elementary school and college”. Merriam-Webster’s Collegiate
Dictionary 1052 (10th ed. 2002).
                                 -8-

     Petitioner’s son will receive a high school diploma from

Randolph-Macon Academy, not a bachelor’s or associate’s degree.

Therefore, Randolph-Macon Academy is a secondary school and is

not an eligible educational institution under section 529(e)(5).

Accordingly, the expenses petitioner paid Randolph-Macon Academy

are not qualified higher education expenses, and the IRA

distributions are not excepted from the section 72(t) additional

tax under section 72(t)(2)(E).

Medical Expenses

     Section 72(t)(2)(B) provides an exception to application of

the section 72(t) additional tax for “Distributions made * * * to

the extent such distributions do not exceed the amount allowable

as a deduction under section 213 * * * for amounts paid during

the taxable year for medical care”.

     Petitioner testified that during 2003 he paid medical

expenses relating to his diabetes.     He did not present any

evidence as to the amount of the medical expenses or their

deductibility under section 213.   Therefore, petitioner failed to

meet his burden of proving that the section 72(t) additional tax

should not apply on account of the medical expense exception.

Conclusion

     Petitioner has not argued, and the record is devoid of any

evidence that would indicate, that the distributions qualify for

any other exception to section 72(t)(1).     For the foregoing
                                 -9-

reasons, we hold that petitioner is liable for a 10-percent

additional tax on $3,480 of early distributions from his IRA.

     In reaching our holdings, we considered all arguments made,

and, to the extent not mentioned, we conclude that they are moot,

irrelevant, or without merit.

     To reflect the foregoing,


                                       Decision will be entered

                                  under Rule 155.
