                     T.C. Summary Opinion 2006-189



                        UNITED STATES TAX COURT



                  JAMES K. MOYER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16838-04S.                Filed December 13, 2006.



     James K. Moyer, pro se.

     Diane L. Worland, for respondent.



     GOLDBERG, Special Trial Judge:     This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect when 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, subsequent

section references are to the Internal Revenue Code in effect for

the year in issue.
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     Respondent determined a deficiency of $1,157 in petitioner’s

2002 Federal income tax.   The issue for decision is whether

petitioner is liable for the 10-percent additional tax under

section 72(t) on a $11,572.40 early distribution from his

individual retirement account (IRA).

                             Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time the petition

was filed, petitioner resided in Argos, Indiana.

     In 1989, petitioner and his girlfriend, Melinda K. Garrison

(Ms. Garrison), had a son.   Petitioner and Ms. Garrison never

married.   When the child was 7 years old, Ms. Garrison

successfully petitioned the Marshall County, Indiana, Child

Support Division, for an Order of Support.   Thereafter,

petitioner paid weekly child support to Ms. Garrison in the

amount of $108, which was taken by an automatic deduction from

his paycheck.

     Petitioner worked as a laborer at Lobdell-Emery, an

automotive parts manufacturing plant, at the time that the Order

of Support was entered.    Petitioner was employed at Lobdell-Emery

until June 2001, when the company decided to close its Indiana

plant and relocate its operations to Mexico.   While employed at

Lobdell-Emery, petitioner participated in the company’s section
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401(k) program.   When the plant shut down, petitioner elected to

“roll over” funds amassed in his section 401(k) account into a

separate IRA account he held with Edward D. Jones, Co. (Edward

Jones).

     After the Lobdell-Emery plant closed, petitioner

participated in vocational rehabilitation, worked at several

part-time jobs as a laborer, and began studies towards an

associate’s degree at a local college.    At the same time that

petitioner started college, he petitioned the Child Support

Division to reduce his weekly support payments based on his

status as a full-time student.    Petitioner’s attempt to reduce

his payments, however, was unsuccessful.    While the record is not

clear as to the exact date that petitioner stopped making his

required child support payments, by August 2002, the Child

Support Division determined that petitioner was $11,572.40 in

arrears on his child support obligation.

     Petitioner completed his associate’s degree in May 2004, and

thereafter began part-time studies towards his bachelor’s degree.

Since completing his associate’s degree, petitioner has lived on

and tended to his parent’s farm.    Petitioner receives income from

taking on occasional odd jobs and selling the firewood that he

cuts and bundles on the farm.    In addition to his farm work and

part-time studies, petitioner has pursued full-time work.    To
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this end, petitioner submitted “Employment Search Verification”

documentation to the Marshall County Circuit Court.

     On August 27, 2002, the Child Support Division issued an

Order/Notice to Withhold Income for Child Support (the Order) on

Edward Jones.   The Order stated that petitioner was in arrears on

his child support obligation for a total of $11,572.40.   Edward

Jones received the Order on September 9, 2002, and on October 2,

2002, notified petitioner by letter that it had liquidated assets

in his IRA account totaling $11,572.40, and had forwarded this

amount to the State of Indiana Collections Unit.   By check dated

October 2, 2002, Edward Jones paid $11,572.40 from petitioner’s

IRA account to the State Central Collection Unit in Indianapolis,

Indiana.

     On his 2002 Federal income tax return, petitioner reported

the $11,572.40 distribution from his IRA as income.   However,

petitioner did not report an additional tax of 10-percent of the

total distribution for the early withdrawal from the IRA.

Respondent determined in the notice of deficiency that petitioner

is liable for the additional tax on an early distribution from a

qualified retirement plan.   Petitioner asserts that he is not

liable for the additional tax on the early distribution because

the Order meets the criteria of a qualified domestic relations

order (QDRO).
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                             Discussion

     Section 72(t) provides for an additional tax of 10 percent

on any amount received as an early distribution from a qualified

retirement plan.    Notably, the section 72(t) additional tax does

not apply in certain situations, and the situation on which

petitioner’s argument relies is described in section 72(t)(2)(C).

That section provides that distributions from qualified

retirement plans are not subject to the additional 10-percent tax

if they are made pursuant to a QDRO within the meaning of section

414(p)(1).

     However, section 72(t)(3)(A) provides that the exception for

distributions pursuant to a QDRO does not apply to distributions

from an individual retirement plan.     Sec. 72(t)(2)(C), (3)(A).

The term “individual retirement plan” is defined as an individual

retirement account or an individual retirement annuity.     Sec.

7701(a)(37).   Assuming arguendo that the Order was, in fact, a

QDRO, the exception provided by section 72(t)(2)(C) is not

applicable because the distribution at issue was made from

petitioner’s IRA.

     Therefore, we must sustain respondent’s determination, and

conclude that petitioner is liable for the additional tax of 10

percent on the $11,572 early distribution from his IRA, pursuant

to section 72(t).
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    Reviewed and adopted as the report of the Small Tax Case

Division.


                                         Decision will be entered

                                     for respondent.
