                  T.C. Summary Opinion 2006-184



                     UNITED STATES TAX COURT



   WILLIAM EDWARD AND PATRICIA MARIE COLOMBELL, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23979-04S.              Filed November 30, 2006.


     William Edward and Patricia Marie Colombell, pro sese.

     Deborah C. Stanley, for respondent.



     ARMEN, 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.1   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, all subsequent section
references are to the Internal Revenue Code in effect for 2002,
the taxable year in issue.
                               - 2 -

     Respondent determined a deficiency in petitioners’ Federal

income tax for 2002 in the amount of $999.     Petitioners timely

filed a petition with the Court.   The sole issue for decision is

whether petitioner Patricia Marie Colombell is an active

participant in her former employer’s qualified retirement plan

and thus ineligible to deduct her $3,500 contribution to an

individual retirement account under section 219.

                            Background

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

found.   We incorporate by reference the parties’ stipulation of

facts at trial and accompanying exhibits.

     At the time the petition was filed, Patricia Marie Colombell

(Mrs. Colombell) and William Edward Colombell (Mr. Colombell)

resided in Fairfax County, Virginia.

     Mrs. Colombell worked as an employee as a pro re nata (PRN)

emergency room nurse for Inova Health System (Inova) for 15

years, until her retirement in 2005.     PRN nurses have no set

schedule but work as needed.   During the time she worked as a PRN

nurse at Inova, Mrs. Colombell was not entitled to health

benefits, sick leave, or vacation time.

     Inova maintained a cash balance retirement plan, a type of

defined benefit plan under section 401(a), for its employees.

Beginning in July 1998, participation in the retirement plan was

both automatic and mandatory for all employees.
                                 - 3 -

     Under the terms of the retirement plan, employees would

receive a pension credit if they were employed by Inova on

December 31 and had worked a minimum of 1,000 hours for Inova

during the calendar year.    During the year at issue, Mrs.

Colombell worked only 511 hours.    In fact, during the entire time

she worked for Inova, Mrs. Colombell never worked 1,000 hours in

any given year.    Her pension account balance was zero at all

times, and she remains ineligible for any benefit under Inova’s

plan.

     Petitioners timely and jointly filed a Form 1040, U.S.

Individual Income Tax Return (return), for 2002, claiming a

$7,000 deduction for contributions made to their respective

individual retirement accounts (IRAs).2

        The Form W-2, Wage and Tax Statement, provided by Inova and

included by petitioners with their 2002 return, indicated that

Mrs. Colombell was an active participant in a qualified

retirement plan in 2002.    “Active participant” is a term of art,

see Discussion, infra, and neither Mrs. Colombell nor Inova ever

put any money into the Inova plan for Mrs. Colombell.




     2
          Each petitioner contributed $3,500 to his or her IRA.
                                - 4 -

     Respondent disallowed Mrs. Colombell’s $3,500 IRA deduction

and determined a $999 deficiency on the basis of her active

participant status in 2002.3

                             Discussion

     Generally, a taxpayer is entitled to deduct amounts

contributed to an IRA.    See sec. 219(a); sec. 1.219-1(a), Income

Tax Regs.    The deduction may not exceed the lesser of (1) the

deductible amount or (2) an amount equal to the compensation

includable in the taxpayer’s gross income for such year.    Sec.

219(b)(1).    For 2002, the deductible amount was $3,000, increased

to $3,500 if the taxpayer was age 50 or older before the close of

the taxable year.    Sec. 219(b)(5)(A) and (B).

     If, however, for any part of a taxable year, a taxpayer or a

taxpayer’s spouse is an “active participant” in a qualified plan

under section 401(a), the deductible amount of any IRA




     3
        Although respondent disallowed $3,500 of the $7,000
deduction claimed by petitioners, respondent conceded at trial
that Mrs. Colombell would be entitled to $3,500 of basis in her
IRA. Accordingly, when Mrs. Colombell receives distributions
from her IRA, she will be entitled to recover $3,500 tax free,
consistent with applicable law. Any income on that investment
would continue to accrue in a tax-deferred manner. See generally
sec. 408.
                                  - 5 -

contribution for that year may be further limited.4     See sec.

219(a), (g)(1), and (5)(A)(i).

     An “active participant” is defined by section 219(g)(5) as

an individual:

          (A) who is an active participant in--

               (i) a plan described in section 401(a) which
     includes a trust exempt from tax under section 501(a),

                  (ii) an annuity plan described in section 403(a),

                (iii) a plan established for its employees by the
     United States, by a State or political subdivision
     thereof,or by an agency or instrumentality of any of the
     foregoing,

                  (iv) an annuity contract described in section
     403(b), or

               (v) a simplified employee pension (within the
     meaning of section 408(k)), or

                  *     *     *      *    *    *    *

          (B) who makes deductible contributions to a trust
     described in section 501(c)(18).




     4
        The IRA deduction phases out for taxpayers whose modified
adjusted gross incomes exceed certain thresholds (with a complete
disallowance after $64,000 in 2002). See sec. 219(g)(2), and
(3)(B)(i). Here, petitioners’ modified adjusted gross income
exceeded the threshold amount, and thus Mrs. Colombell’s
deduction would be completely disallowed if she were an active
participant in a qualified retirement plan. For individuals
subject to the limits of sec. 219(g) solely because their spouse
was an active participant in a qualified plan, the phaseout does
not apply until the couple’s joint modified adjusted gross income
exceeds $150,000. See sec. 219(g)(7)(A). Mr. Colombell was not
himself an active participant in a qualified retirement plan, and
the petitioners’ modified adjusted gross income did not exceed
$150,000 in 2002. Thus, the half of the claimed deduction
attributable to Mr. Colombell is not at issue in this case.
                                   - 6 -

       The determination of whether an individual is an active
       participant shall be made without regard to whether or not
       such individual’s rights under a plan, trust, or contract
       are nonforfeitable.

       Petitioners logically contend that because Mrs. Colombell

never actually participated in the pension, nor did her employer

ever participate on her behalf, Mrs. Colombell was not an active

participant in the plan.       Petitioners invoke the commonly

accepted meanings of the terms “active” and “participant”.         Thus,

the dictionary defines “active” as, inter alia:

               1: characterized by action rather than by
               contemplation or speculation 2: * * * involving
               action * * * 8: * * * b: engaged in an action or
               activity

Merriam-Webster’s Collegiate Dictionary (10th ed. 1996).

Similarly, a “participant” is defined as “one that participates”.

Id.

       The regulations, however, provide that an individual is an

active participant in a defined benefit plan simply by not being

excluded from the plan.       See sec. 1.219-2(h), Example (1), Income

Tax Regs.       No actual behavior on anyone’s part is required.   In

fact, actual knowledge of the plan’s existence is not even

required.5      See, e.g., Baumann v. Commissioner, T.C. Memo. 1995-

313.       Because Inova’s plan was mandatory for all employees, Mrs.


       5
        Mrs. Colombell may or may not have known that she was
eligible to participate in Inova’s 401(k) plan. While this does
not change the result we reach, the Court notes that
participation in Inova’s 401(k) plan would have led to a pretax
savings for retirement, achieving the end tax result desired by
petitioners.
                               - 7 -

Colombell was not excluded.   Even if she never met the

dictionary’s definition of what it would mean to be an “active

participant”, the regulations make it clear that she was an

active participant in Inova’s retirement plan for the year in

issue.6

     There are cases that have held that even de minimis

participation is sufficient to render a taxpayer an active

participant.   See, e.g., Wade v. Commissioner, T.C. Memo. 2001-

114 (holding that a mandatory contribution amounting to $84.89

was sufficient to constitute active participation even though the

taxpayer was unlikely ever to receive benefits under the plan).

Others have held that forfeiting rights to a balance in a

qualified plan does not mean that the taxpayer was not an active

participant for the year in question.   See, e.g., Eanes v.

Commissioner, 85 T.C. 168 (1985) (stating that a taxpayer who

forfeited all rights under his employer’s retirement plan when he

left after only 3 months was still an active participant in the

plan and was not entitled to a deduction).7   Here we have a


     6
        Had Inova’s plan had an earnings threshold rather than an
hours-worked threshold, Mrs. Colombell might not have been an
active participant. See sec. 1.219-2(b)(1), Income Tax Regs.,
explaining that an individual is not an active participant if his
or her compensation is “less than the minimum amount of
compensation needed under the plan to accrue a benefit.”
     7
        Sec. 219, as applicable to 1981, the taxable year in
issue in Eanes v. Commissioner, 85 T.C. 168 (1985), did not
include a definition of “active participant”. The flush language
currently contained in sec. 219(g)(5), referring to whether the
                                                   (continued...)
                               - 8 -

taxpayer with a zero balance in her account.   During the 15 years

petitioner worked for Inova, she never once met the threshold for

pension credit contributions, nor was her job designed such that

it would be realistically possible to do so.   Despite the fact

that Mrs. Colombell received no tax benefit whatsoever from her

“participation” in Inova’s retirement plan, the Court is not free

to rewrite the law.   See, e.g., Hildebrand v. Commissioner, 683

F.2d 57, 59 (3d Cir. 1982), affg. T.C. Memo. 1980-532; Johnson v.

Commissioner, 661 F.2d 53, 54-55 (5th Cir. 1981), affg. 74 T.C.

1057 (1980).   We must conclude that petitioner was, for Internal

Revenue Code purposes, an active participant in Inova’s

retirement plan in 2002.

                            Conclusion

     The tax code is complex, see generally Cheek v. United

States, 498 U.S. 192, 199-200 (1991), and we must enforce the

laws as written and interpreted, see Marsh & McLennan Cos. v.

United States, 302 F.3d 1369, 1381 (Fed. Cir. 2002); Philadelphia

& Reading Corp. v. United States, 944 F.2d 1063, 1074 (3d Cir.

1991).   The result in this case is harsh, and unfortunately the

Court can appreciate why petitioners will regard it as such.    The

regulation in its current form, the validity of which has not

been called into question, dictates the result.   The Court may


     7
      (...continued)
individual’s rights under the plan are forfeitable, was then
found only in the legislative history. See H. Rept. 93-807, at
129 (1974), 1974-3 C.B. (Supp.) 236, 364.
                                 - 9 -

not “revise the language of the statute as interpreted by the

Treasury to achieve what might be perceived to be better tax

policy.”    FleetBoston Fin. Corp. v. United States, 68 Fed. Cl.

177, 188 (2005) (quoting Marsh & McLennan Cos. v. United States,

supra, at 1381).   Rather, we must apply the language of the

relevant provisions, as written.    See Commissioner v. Lundy, 516

U.S. 235, 252 (1996) (courts are “bound by the language of the

statute as it is written”); Badaracco v. Commissioner, 464 U.S.

386, 398 (1984) (“Courts are not authorized to rewrite a statute

because they might deem its effect susceptible of improvement.”).

     The Tax Court is a court of limited jurisdiction and lacks

general equitable powers.     Commissioner v. McCoy, 484 U.S. 3, 7

(1987); Hays Corp. v. Commissioner, 40 T.C. 436, 442-443 (1963),

affd. 331 F.2d 422 (7th Cir. 1964).       Our jurisdiction to grant

equitable relief is limited.     Woods v. Commissioner, 92 T.C. 776,

784-787 (1989); Estate of Rosenberg v. Commissioner, 73 T.C.

1014, 1017-1018 (1980).   Accordingly, we must sustain

respondent’s determination.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect our disposition of the disputed issue,



                                              Decision will be entered

                                         for respondent.
