                  T.C. Summary Opinion 2006-170



                     UNITED STATES TAX COURT



   NADER GHAZITEHRANI AND FARZANEH ZAMANIZADEH, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12653-05S.            Filed October 23, 2006.


     Nader Ghazitehrani and Farzaneh Zamanizadeh, pro sese.

     Aimee R. Lobo-Berg, Thomas J. Travers, and Anna L. Rooney

(specially recognized), for respondent.



     PANUTHOS, Chief 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.    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
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Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

     Respondent determined a deficiency of $2,338 in petitioners’

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

distribution from a qualified retirement plan is subject to the

10-percent additional tax under section 72(t).

                              Background

     Some of the facts have been stipulated, and they are so

found.   The stipulation of facts and the attached exhibits are

incorporated herein by this reference.     At the time the petition

was filed, petitioners resided in Vancouver, Washington.    Unless

otherwise indicated, all references to petitioner are to Mr.

Ghazitehrani.

     Beginning in 1988, petitioner worked as an engineer for the

Boeing Company (Boeing).   Boeing maintained a section 401(k)

retirement plan to which petitioner contributed.    In or about

1999, petitioner borrowed approximately $32,000 from the

retirement plan.

     Petitioner was terminated from Boeing in 2002, when he was

approximately 53 years old.    At that time, the unpaid balance of

the loan from the retirement plan was $23,378.    Petitioners

reported that amount as a taxable distribution on their joint

2002 Federal income tax return but did not report a 10-percent
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additional tax on the distribution.     Petitioners prepared their

tax return using TurboTax, a tax preparation software program.

     Respondent determined that the $23,378 distribution was

subject to a 10-percent additional tax under section 72(t).

Respondent issued petitioners a notice of deficiency on April 18,

2005.   Petitioners timely petitioned the Court for

redetermination of the deficiency.

     At some point after the petition was filed, petitioners were

divorced.   At trial, Ms. Zamanizadeh indicated that she wished to

seek relief under section 6015, which is commonly referred to as

innocent spouse relief.    Petitioner stated that he did not object

to Ms. Zamanizadeh’s being granted relief.    The Court held the

record open to permit Ms. Zamanizadeh to file an administrative

claim with respondent.    In September 2006, respondent informed

the Court that Ms. Zamanizadeh had been granted relief under

section 6015(c).   The Court then closed the record.

                             Discussion

     In general, the Commissioner’s determinations set forth in a

notice of deficiency are presumed correct, and the taxpayer bears

the burden of showing that the determinations are in error.     Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).     Pursuant

to section 7491(a), the burden of proof as to factual matters

shifts to the Commissioner under certain circumstances.    We

decide this case without regard to the burden of proof.
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Accordingly, we need not decide whether section 7491(a) applies

in this case.1

     Section 72(t)(1) imposes an additional tax on an early

distribution from a qualified retirement plan equal to 10 percent

of the portion of the amount which is includable in gross income.

A qualified retirement plan includes a section 401(k) plan.    See

secs. 401(a), (k)(1), 4974(c)(1).   Petitioners do not dispute

that the unpaid balance of the loan from the section 401(k) plan

was an early distribution which was includable in gross income.

     The 10-percent additional tax does not apply to certain

distributions, including distributions:   (1) To an employee age

59-1/2 or older; (2) on account of the employee’s disability; (3)

as part of a series of substantially equal periodic payments made

for life; (4) to an employee after separation from service after

attainment of age 55; (5) to an employee for medical care; or (6)

to an alternate payee pursuant to a qualified domestic relations

order.   Sec. 72(t)(2).

     Petitioners do not argue that they satisfy any of the

enumerated exceptions under section 72(t)(2).   Instead,

petitioners contend that the additional tax should not apply


     1
       Pursuant to sec. 7491(c), the Commissioner bears the
burden of production with respect to any penalty, addition to
tax, or additional amount. Even if the $2,338 additional tax
under sec. 72(t) is an “additional amount” for which respondent
bears the burden of production, respondent has met such burden by
showing that petitioner received the distribution when he was 53
years old. See Milner v. Commissioner, T.C. Memo. 2004-111 n.2.
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because of financial hardship.      We have held, however, that

general financial hardship is not an exception to the additional

tax.    Milner v. Commissioner, T.C. Memo. 2004-111.

       In the alternative, petitioners argue that any errors on

their return are attributable to the TurboTax program.         Thus,

petitioners contend, they should not be liable for the additional

tax.    We disagree.   Even if the TurboTax program was at fault, a

poorly prepared return “is simply no reason to relieve * * *

[taxpayers] of taxes which were legally owing and which would

have been paid upon the filing of their * * * return if their

return had been correctly calculated.”         See Kelly v.

Commissioner, T.C. Memo. 1983-156.

       We sustain respondent’s determination that the $23,378

distribution from Boeing is subject to the 10-percent additional

tax under section 72(t).    Because respondent has granted Ms.

Zamanizadeh relief under section 6015(c), petitioner shall be

solely liable for the deficiency.

       Reviewed and adopted as the report of the Small Tax Case

Division.

       To reflect the foregoing,


                                                An appropriate decision

                                           will be entered.
