                  T.C. Summary Opinion 2004-146



                     UNITED STATES TAX COURT



          JACK A. AND THERESA Y. SMITH, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11507-02S.              Filed October 21, 2004.


     Randy P. Zinna, for petitioners.

     Brenda Fitzgerald, for respondent.



     PAJAK, 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, section references are to the Internal Revenue Code in

effect for the year in 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 deficiencies of $10,396 and $1,056 in

petitioners’ 1998 and 1999 Federal income taxes, respectively.

After concessions by the parties, the sole issue for decision is

whether petitioners are liable for the 10-percent additional tax

under section 72(t) on a pension distribution of $76,087 received

during 1998.

       This case was submitted fully stipulated pursuant to Rule

122.    All of the facts stipulated are so found.   Petitioners

resided in Canton, Georgia, at the time they filed their

petition.

       Section 7491(a) does not apply because this case involves a

legal issue.

       Petitioner retired from the New Orleans Police Department

(Police Department) in 1996.    He retired from the Police

Department at age 50, after completing 32 years of service.

       During 1998, petitioner received $27,809.40 from his

qualified retirement plan as part of a series of equal periodic

payments from that plan.    Respondent concedes that this amount is

not subject to the additional tax under section 72(t).

       During 1998, petitioner withdrew $76,087 in a lump-sum

distribution of the balance of his qualified retirement plan

(lump-sum distribution).    The parties agree that “All of the

distributions in this case are distributions from a qualified

pension or retirement plan under I.R.C. § 401(a) of a government
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entity.”   Respondent contends that the $76,087 is a distribution

subject to the section 72(t) additional tax.

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

distributions from qualified retirement plans, unless an

exception applies.   Section 72(t)(2)(A)(iv) is the only relevant

exception here.

     Section 72(t)(2)(A)(iv) provides that the 10-percent

additional tax shall not apply to distributions which are “part

of a series of substantially equal periodic payments (not less

frequently than annually) made for the life (or life expectancy)

of the employee or the joint lives (or joint life expectancies)

of such employee and his designated beneficiary”.

     Petitioners contend that “The lump sum distribution received

by Petitioner was part of a series of substantially equal

periodic payments based upon his life expectancy that were

accumulated monthly from July 1, 1991 to July 1, 1994.”

Unfortunately, petitioners focus on the contributions made to the

pension plan, not on the payments made from the plan.

     We find that the lump-sum distribution does not satisfy the

requirements of the exception under section 72(t)(2)(A)(iv).      The

lump-sum distribution was a one-time payment.   The lump-sum

distribution was not part of a series of substantially equal

periodic payments made not less frequently than annually.    On

this record, we conclude that the lump-sum distribution is
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subject to the 10-percent additional tax under section 72(t).

     Contentions we have not addressed are irrelevant, moot, or

without merit.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                        Decision will be entered

                                   under Rule 155.
