                   T.C. Summary Opinion 2006-58



                      UNITED STATES TAX COURT



           RICHARD C. AND MARY JO RUNYAN, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 4124-04S.             Filed April 19, 2006.


     Richard S. Avellone, for petitioners.

     Steven W. LaBounty, for respondent.



     COUVILLION, Special Trial Judge:   This case was heard

pursuant to section 7463 in effect at the time 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.

     Respondent determined a deficiency of $3,057 in petitioners’

2001 Federal income tax.



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


     The sole issue for decision is whether petitioners are

entitled to a deduction of $5,221 for the year 2001 for a

contribution to a retirement plan under section 408(k), commonly

referred to as a SIMPLE IRA.

     Some of the facts were stipulated.   Those facts and the

accompanying exhibits are so found and are incorporated herein by

reference.   Petitioners’ legal residence at the time the petition

was filed was Labadie, Missouri.   Petitioners were not present at

trial but were represented by counsel.

     Petitioners filed a timely joint Federal income tax return

for 2001, on which they reported the following income:


     Wages and salaries                            $299,273
     Taxable interest                                12,537
     Ordinary dividends                               1,370
     Taxable refunds and credits                        235
     Schedule C, Trade or Business Income            10,384
     Schedule D, Capital Losses                      (3,000)
       Total income                                $320,799


     On line 29, Self-employed SEP, SIMPLE, and qualified plans,

of Form 1040, U.S. Individual Income Tax Return, for the year

2001, petitioners claimed a deduction of $6,788.   In the notice

of deficiency, respondent determined that $1,567 of that amount

was allowable as a SEP contribution, and $5,221 was disallowed.

Thus, of the $6,788 claimed on line 29 of their return, $5,221

was not allowed as a qualified plan deduction.   The issue,

therefore, is whether that $5,221 is allowable as a pension plan
                                   - 3 -


contribution.2       Petitioners contend the $5,221 represented a

contribution to a SIMPLE IRA.       That is the sole issue for

decision.

        Although respondent determined that petitioners had not

proven that they paid $5,221 toward a qualified pension plan,

petitioners at trial, through their attorney, presented

documentation that petitioners had made a payment of $6,788 on

April 25, 2002, to Northwestern Mutual Life Insurance Co.         Based

on that documentation, petitioners maintain that this amount

represented a contribution to a qualified plan.         The claimed

contribution was in connection with the self-employment activity

of Richard C. Runyan (petitioner).         The documents offered into

evidence characterized the $6,788 as a contribution to a

simplified employee IRA, which is commonly referred to as a

“SEP”.       Such a plan is different from a SIMPLE plan or a SIMPLE

IRA.3       Petitioners contend, nevertheless, that they properly

established a plan by executing Form 5304-SIMPLE, Savings


        2
      Two other adjustments in the notice of deficiency have been
conceded by petitioners: Unreported interest income of $182 and
a $2,136 distributive share of partnership income (Tomco Realty,
LLC).
        3
      The term SIMPLE means Savings Incentive Match Plan for
Employees of Small Employers. The plan is effected by signing
Form 5304-SIMPLE, which is not filed with the IRS. A SEP means
Salary Reduction Simplified Employee Pension and originates with
execution of Form 5305-A, Salary Reduction Simplified Employee
Pension. That form also is not filed with the IRS. Neither Form
5304-A nor Form 5305-A was offered into evidence at trial.
                               - 4 -


Incentive Match Plan for Employees of Small Employers (SIMPLE),

which is not required to be filed.     A copy of that document,

however, was not produced at trial, nor was any evidence offered

to show whether Northwestern Mutual Life Insurance Co.

mischaracterized the $6,222 as a SEP.

     Petitioners’ 2001 Federal income tax return was signed on

April 14, 2002, and was presumably filed on that date.     The

return was prepared by the attorney who represented petitioners

at trial, who is also a certified public accountant.

     Both SIMPLE and SEP plans are considered and treated as

versions of an IRA.   The authority for a SIMPLE plan is section

408(p).   A SEP, on the other hand, is defined in section 408(k).

The differences between SIMPLE and SEP plans are not material to

the issue in this case.4

     Section 408(p)(5)(A)(i) requires that the contribution to

any SIMPLE retirement account must be made not later than the

close of the 30-day period following the last day of the month

with respect to which the contributions are to be made.



     4
      Respondent agreed that petitioners had a qualified SEP plan
during 2001 and made a contribution of $3,000 to Northwestern
Mutual Life Insurance Co. for the year 2001. In the notice of
deficiency, respondent determined that $1,567 of the $3,000
contributed was allowable as a deduction based on an information
return, Form 5498, IRA Contribution Information, SEP
contributions, filed by Northwestern Mutual Life Insurance Co.
It does not appear that a Form 5498 was issued by Northwestern
Mutual Life Insurance Co. for the $5,221 at issue in this case.
                              - 5 -


     In this case, the claimed contribution was in connection

with petitioner’s self-employed activity.    Thus, the last day of

the business year for that activity was December 31, 2001.

Petitioners, therefore, were required to make their SIMPLE

contribution on or before January 31, 2002.    The evidence

presented by petitioners at trial, which came from Northwestern

Mutual Life Insurance Co., the trustee for the trust, shows that

the $6,788 payment by petitioners was received on April 25, 2002,

and “Payment Processed on 04/26/2002”.    That payment, which

includes the $5,221 at issue, was not a timely contribution for

the year 2001 as a SIMPLE IRA contribution.    Respondent,

therefore, is sustained.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                      Decision will be entered

                              for respondent.
