                  T.C. Summary Opinion 2001-33



                     UNITED STATES TAX COURT



  JOHN WALTER HODDER AND SHEILA LARAINE HODDER, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3514-99S.                    Filed March 20, 2001.



     John Walter Hodder, pro se.

     Charles J. Graves, for respondent.



     DINAN, 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 Revenue Code in

effect for the year in issue.
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     Respondent determined a deficiency in petitioners’ Federal

income tax of $600 for the taxable year 1995.

     The issue for decision is whether petitioners are entitled

to a deduction for contributions made to individual retirement

accounts (IRA’s) in 1995.

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

The stipulations of fact and the attached exhibits are

incorporated herein by this reference.       Petitioners resided in

Topeka, Kansas, on the date the petition was filed in this case.

     Petitioner husband (petitioner), was employed by La Siesta

Foods, Inc. (Siesta), during 1995.       At that time, Siesta

maintained for its employees a profit-sharing plan.

Approximately $442 was contributed by Siesta to a plan account in

petitioner’s name during 1995.    After Siesta was acquired by

Reser’s Fine Foods, Inc. (Reser’s) in 1996, the plan was

terminated and its participants became fully vested.       Petitioner

subsequently rolled the $442 over into an IRA account.

     On their joint Federal income tax return for taxable year

1995, petitioners claimed deductions totaling $4,000 for

contributions to IRA’s.   The adjusted gross income reported on

the return was $61,652, reflecting the deductions claimed for the

IRA contributions.   In the only adjustment made in the statutory

notice of deficiency, respondent disallowed the IRA contribution

deductions in their entirety.
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     In general, a taxpayer is entitled to deduct the amount of

his contribution to an IRA.    See sec. 219(a).   The deduction in

any taxable year generally is limited to $2,000.    See sec.

219(b)(1)(A).    The amount of the deduction is further limited

where the taxpayer or his spouse is, for any part of the taxable

year, an “active participant” under certain pension plans.     See

sec. 219(g).    In such a case, for married taxpayers who file a

joint return, the deduction allowable with respect to either

spouse is reduced to zero where the taxpayers’ adjusted gross

income (as modified by section 219(g)(3)(A)) equals or is greater

than $50,000.    See id.   Petitioners’ modified adjusted gross

income in 1995, as reflected on their return, exceeded $50,000.

Thus, if petitioner was an active participant in 1995,

petitioners are not entitled to deduct contributions made to

IRA’s.

     An active participant is defined by the statute to include

an individual who is an active participant in a plan described in

section 401(a).    See sec. 219(g)(5)(A)(i).   Elaborating upon this

circular definition, the regulations provide that an individual

is an active participant in a profit-sharing plan if, during the

taxable year, (1) a forfeiture is allocated to his account, (2)

an employer contribution is added to his account, or (3) a

mandatory or voluntary contribution is made by the individual to

his account.    See sec. 1.219-2(d)(1) and (e), Income Tax Regs.

An individual’s status as an active participant in a plan is not
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altered by the fact that the individual’s rights under the plan

are forfeitable.   See sec. 219(g)(5).

     It is undisputed that an employer contribution was added to

a profit-sharing plan account in petitioner’s name during 1995.1

Petitioner argued at trial that he was not an active participant

because, according to his testimony, he entered into a verbal

agreement removing himself from participation in the written plan

when he commenced employment with Siesta; consequently, the

contribution made to his account was made in error.    We need not

address this argument because we do not accept petitioner’s

testimony.

     First, and most importantly, petitioner’s testimony is

directly contradicted by a letter dated November 25, 1997, which

he sent to the Internal Revenue Service.    In that letter he

stated:   “The plan in question was not voluntary; I had no choice

in taking part in it.    If I had, I would have declined the

benefit.”    Second, the individual who purportedly entered into

the verbal agreement with petitioner--the then president of

Siesta--did not testify at trial and according to petitioner does

not remember entering into such an agreement.    Finally, the

rationale petitioner provided for desiring to contract out of the

plan was not convincing; viz, that the nature of his job made

vesting in the plan unlikely.




     1
      Nothing in the record indicates this plan was not a profit-
sharing plan described in sec. 401(a).
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     Because an employer contribution was added to his account in

1995, petitioner was an active participant in Siesta’s profit-

sharing plan in that year.   See sec. 1.219-2(d)(1), Income Tax

Regs.

     Petitioners also argue that “the law is not fair”, that “the

law was designed to allow taxpayers to maximize their retirement

savings”, and that a negative result in this case would “minimize

the incentive to save”.    This Court is not the proper place for

these arguments.   We must apply the law as it is written; it is

up to Congress to address questions of fairness and to make

improvements to the law.   See Metzger Trust v. Commissioner, 76

T.C. 42, 59-60 (1981), affd. 693 F.2d 459 (5th Cir. 1982).

     Because petitioner was an active participant in a qualified

retirement plan in 1995, petitioners are precluded by section

219(g) from deducting contributions to IRA’s made during that

year.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                         Decision will be entered

                                 for respondent.
