                  T.C. Summary Opinion 2003-123



                       UNITED STATES TAX COURT



                  GARY PAUL RUSH, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 04557-01S.              Filed September 2, 2003.


     Gary Paul Rush, pro se.

     T. Richard Sealy III and Catherine S. Tyson, for

respondent.



     VASQUEZ, Judge:    This case was heard pursuant to the

provisions of section 74631 in effect at the time petitioner

filed the petition.    The decision to be entered is not reviewable




     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code for the relevant
year.
                               - 2 -

by any other court, and this opinion should not be cited as

authority.

     Respondent determined a deficiency in petitioner’s Federal

income tax for 1998 in the amount of $2,668.2   The sole issue for

decision is whether petitioner is liable for a 10-percent

additional tax pursuant to section 72(t)(1) on distributions he

received, totaling $26,681, from his three qualified retirement

plans.

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 he filed the

petition, petitioner resided in Las Cruces, New Mexico.

Petitioner is employed as a rural mail carrier in Las Cruces.

     Petitioner had investments in three qualified retirement

plans.   In 1998, petitioner cashed out these plans.   He received

$18,127 from Nationsbank, N.A., $3,337 from Franklin Templeton

Trust Co., and $5,217 from IDS Life Ins. Co.    Petitioner was 53

years old when he received the distributions.

     Petitioner received three Forms 1099-R, Distributions From

Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,

Insurance Contracts, etc., for 1998 reflecting the distributions.

Petitioner reported the distributions on his Federal income tax


     2
         Amounts are rounded to the nearest dollar.
                                 - 3 -

return.   Petitioner did not report the 10-percent additional tax.

     Petitioner used the distributions to pay down debt on his

credit cards.    He also invested some of the money.    Petitioner

did not roll over any portion of the distribution into another

IRA or qualified retirement account.     Petitioner did not receive

the distributions on account of a disability, as part of a series

of substantially equal periodic payments made for life, or for

medical care.

Discussion

     Section 72(t) provides for a 10-percent additional tax on

early distributions from a qualified retirement plan.      “The

legislative purpose underlying the section 72(t) tax is that

‘premature distributions from IRA’s frustrate the intention of

saving for retirement, and section 72(t) discourages this from

happening.’”     Arnold v. Commissioner, 111 T.C. 250, 255 (1998)

(quoting Dwyer v. Commissioner, 106 T.C. 337, 340 (1996)).

     A qualified retirement plan includes an IRA.      See secs.

408(a), 4974(c).    It is undisputed that Nationsbank, N.A.,

Franklin Templeton Trust Co. and IDS Life Ins. Co. were qualified

retirement plans.

     The 10-percent additional tax does not apply to certain

distributions.    Section 72(t)(2) excludes qualified retirement

plan distributions from the 10-percent additional tax if the

distributions are:    (1) Made on or after the date on which the
                               - 4 -

employee attains the age of 59-1/2; (2) made to a beneficiary (or

to the estate of the employee) on or after the death of the

employee; (3) attributable to the employee's being disabled

within the meaning of section 72(m)(7); (4) part of a series of

substantially equal periodic payments (not less frequently than

annually) made for the life (or life expectancy) of the employee

or joint lives (or joint life expectancies) of such employee and

his designated beneficiary; (5) made to an employee after

separation from service after attainment of age 55; or (6)

dividends paid with respect to stock of a corporation which are

described in section 404(k).   Sec. 72(t)(2)(A).    A limited

exclusion is also available for distributions made to an employee

for medical care expenses. See sec. 72(t)(2)(B).

     Petitioner has the burden of proving his entitlement to any

of these exceptions.3   Bunney v. Commissioner, 114 T.C. 259, 265

(2000).   Petitioner testified that he used the distributions to

reduce his debt.   Although he reinvested some of the funds,

petitioner did not roll over any of the distributions into

another qualified retirement plan.     Indeed, petitioner stated

that he no longer had any IRAs.   The evidence shows that none of



     3
        Sec. 7491 is effective for court proceedings arising in
connection with examinations commencing after July 22, 1998.
Petitioner does not contend that sec. 7491 is applicable to his
case. Further, the resolution of this case does not depend on
which party has the burden of proof.
                                 - 5 -

the exceptions set forth in section 72(t)(2) apply in this case.

Thus, the early distributions made by petitioner are subject to

the additional 10-percent tax under section 72(t)(1).

     In reaching our holding, we have considered all arguments

made by the parties, and to the extent not mentioned above, we

find them to be irrelevant or without merit.

     To reflect the foregoing,

                                               Decision will be

                                         entered for respondent.
