                  T.C. Summary Opinion 2004-88



                     UNITED STATES TAX COURT



         ALPHONSE M. AND DORIS ESPOSITO, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13786-03S.            Filed June 30, 2004.


     Alphonse M. and Doris Esposito, pro se.

     Catherine R. Chastanet, for respondent.



     POWELL, Special Trial Judge:   This case was heard pursuant

to the provisions of section 74631 of the Internal Revenue Code

in effect at the time 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.




     1
        Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue.
                                - 2 -

       Respondent determined a deficiency of $10,000 in

petitioners’ 1998 Federal income tax.      The issue is whether

petitioners are liable for the 10-percent additional tax under

section 72(t) on an early distribution from a qualified section

401(k) retirement plan.    Petitioners resided in Mt. Sinai, New

York, at the time the petition was filed.

       The applicable facts may be summarized as follows.2   In

1998, petitioner Alphonse M. Esposito (petitioner) withdrew

$100,000 from his retirement plan to pay the higher education

expenses for four of his children.      In preparing their 1998

Federal income tax return, petitioners included the $100,000

distribution but did not report the additional tax for an early

distribution under section 72(t).    In the notice of deficiency,

respondent determined petitioners were liable for the additional

tax.

       Section 72(t)(1) imposes an additional tax of 10 percent of

the taxable amount received from a “qualified retirement plan (as

defined in section 4974(c))”.    Petitioner maintains that the

additional tax does not apply because the distribution qualifies

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

       Section 72(t)(2)(E) provides that the additional tax on

early distributions does not apply to “distributions to an


       2
         The facts are not in dispute, and the issue is primarily
one of law. Sec. 7491, concerning burden of proof, has no
bearing on this issue.
                                - 3 -

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.” (Emphasis

added.)    An “individual retirement plan” is defined as:   “(A) an

individual retirement account described in section 408(a), and

(B) an individual retirement annuity described in section

408(b).”    Sec. 7701(a)(37) (an individual retirement plan is

commonly referred to as an IRA).    Section 72(t)(2)(E) was added

by section 203(a) of the Taxpayer Relief Act of 1997, Pub. L.

105-34, 111 Stat. 788, 809.    The Report of the Committee on the

Budget refers only to withdrawals from IRAs.    See H. Rept. 105-

148, at 288-289 (1997), 1997-4 C.B. (Vol. 1) 319, 610-611.    It is

undisputed that the retirement plan from which petitioner

withdrew the $100,000 is a plan described in section 401(k), and,

therefore, the exception contained in section 71(t)(2)(E) does

not apply.

     Petitioner relies on his interpretation of the instructions

to the 1998 Form 1040, U.S. Individual Income Tax Return, to

establish that section 71(t)(2)(E) is applicable.    The

differences between a “qualified retirement plan” and an

“individual retirement plan” may be subtle.    Nonetheless, they do

exist, and the authoritative sources of Federal tax law are the

statutes, regulations, and case law.    Green v. Commissioner, 59
                                 - 4 -

T.C. 456, 458 (1972).   The statutory framework is clear that

section 72(t)(2)(E) does not apply, and respondent is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                         Decision will be entered

                                 for respondent.
