                  T.C. Summary Opinion 2007-129



                     UNITED STATES TAX COURT



                JEFFREY LEE GOLIAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6603-06S.               Filed July 26, 2007.


     Jeffrey Lee Golian, pro se.

     Steven I. Josephy, 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   Pursuant to section

7463(b), the decision to be entered is not reviewable by any




     1
        All subsequent section references are to the Internal
Revenue Code in effect for 2003, the taxable year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 2 -

other court, and this opinion shall not be treated as precedent

for any other case.

     For 2003, respondent determined a deficiency in petitioner’s

Federal income tax of $9,083 and an accuracy-related penalty

under section 6662(a) of $1,817.   After concessions by the

parties,2 the sole issue for decision is whether petitioner is

liable for the 10-percent additional tax under section 72(t) on

an early distribution from a qualified retirement plan.   We hold

that he is.

                            Background

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

found.   We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

     At the time that the petition was filed, Jeffrey Lee Golian

(petitioner) resided in the State of Colorado.

     For a period of time prior to the year in issue, petitioner

was employed by the Kansas City Southern Railroad (the railroad)

and lived in the Kansas City area in a single-family residence,

which he owned.

     While he was employed by the railroad, petitioner maintained

a section 401(k) account.   Petitioner contributed 3 percent of


     2
        Petitioner concedes that he received taxable nonemployee
compensation of $1,106 from Translink, Inc., that was not
reported on his 2003 return. Respondent concedes that petitioner
is not liable for the accuracy-related penalty under sec.
6662(a).
                                   - 3 -

his salary to the section 401(k) account on a pretax basis, and

his employer made       matching contributions.

        Upon termination of his employment with the railroad,

petitioner rolled his 401(k) account into an individual

retirement account (IRA).       In 2003, the custodian of petitioner’s

IRA was Wachovia Securities LLC, and the account consisted of a

portfolio of mutual funds.

        Also upon termination of his employment with the railroad,

petitioner sold his Kansas City residence and relocated to the

Denver area, where the cost-of-living, and specifically the cost

of housing, was greater.       In 2003, needing money to finance the

purchase of a new home, and being both a single father and

temporarily unemployed, petitioner withdrew $86,333.33 from his

IRA.3       Petitioner used the proceeds, net of withheld taxes, to

help finance the downpayment for his new home.

        Petitioner was 46 years old and not disabled in 2003 when he

received the IRA distribution.

        Petitioner filed a Form 1040, U.S. Individual Income Tax

Return for 2003.       On line 15a of his return, petitioner reported

an IRA distribution of $86,333.33, and on line 15b he reported




        3
        The distribution did not exhaust petitioner’s account
balance; however, the distribution was not part of a series of
substantially equal periodic payments made for petitioner’s life
(or life expectancy).
                                   - 4 -

the entire distribution as the taxable amount, which he included

in gross income.

                                Discussion

       In general, the Commissioner’s determinations in a notice of

deficiency are presumed correct, and the taxpayer bears the

burden of showing that those determinations are erroneous.         Rule

142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992);

Welch v. Helvering, 290 U.S. 111, 115 (1933).        Pursuant to

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

shift to the Commissioner under certain circumstances.        We decide

this case without regard to the burden of proof.        Accordingly, we

need not decide whether section 7491(a) applies in this case.4

       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 that is includable in gross income.

A qualified retirement plan includes a section 401(k) plan and an

IRA.       See secs. 401(a), (k)(1), 408(a), 4974(c)(1).   The 10-

percent additional tax is intended to discourage premature

distributions from retirement plans.         Dwyer v. Commissioner, 106


       4
        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 10-percent additional tax
under sec. 72(t) is an “additional amount” for which respondent
bears the burden of production, respondent has met such burden by
demonstrating that petitioner was 46 years old in 2003 when he
received the distribution in issue. See Milner v. Commissioner,
T.C. Memo. 2004-111 n. 2.
                                 - 5 -

T.C. 337, 340 (1996); see also S. Rept. 93-383, at 134 (1973),

1974-3 C.B. (Supp.) 80, 213.5

     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 the employee’s life (or life expectancy); or (4) to an

individual from an IRA which are qualified first-time home buyer

distributions.6    Sec. 72(t)(2)(A)(i), (iii), and (iv), (F).

     Petitioner does not dispute that the $86,333.33 distribution

from his IRA was an early distribution from a qualified

retirement plan.    Indeed, petitioner properly included the

distribution in gross income.7




     5
        At trial, petitioner accurately described his IRA as an
account “for my retirement.” This is precisely why a
preretirement distribution is generally subject to the 10-percent
additional tax and why there are relatively few exceptions. “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).
     6
        For purposes of sec. 72(t), the term “employee” includes
(in the case of an individual retirement plan) the individual for
whose benefit the plan was established. Sec. 72(t)(5).
     7
        Generally, a distribution from an IRA is includable in
the distributee’s gross income in the year of distribution under
the provisions of sec. 72. See sec. 408(d)(1); see also sec.
61(a)(9), (11); Arnold v. Commissioner, supra at 253.
                                - 6 -

     Petitioner also does not contend that he satisfies any of

the specific exceptions set forth in section 72(t)(2).    Rather,

petitioner contends that the 10-percent additional tax should not

apply because of financial hardship.    However, we have expressly

held that financial hardship is not an exception to the

additional tax imposed by section 72(t).   E.g., Arnold v.

Commissioner, 111 T.C. 250, 255 (1998); Milner v. Commissioner,

T.C. Memo. 2004-111; Gallagher v. Commissioner, T.C. Memo. 2001-34.

     We recognize that petitioner received his IRA distribution

at a time when he was both a single parent and temporarily

unemployed and that he used the distribution for a laudable

purpose.    Unfortunately for petitioner, we are bound by the list

of statutory exceptions set forth in section 72(t)(2).    Schoof v.

Commissioner, 110 T.C. 1, 11 (1998); Clark v. Commissioner, 101

T.C. 215, 224-225 (1993); Swihart v. Commissioner, T.C. Memo.

1998-407.   Thus, although we may be sympathetic to petitioner’s

position, we are constrained to sustain respondent’s

determination on this issue.

     Finally, the fact that respondent only determined the 10-

percent additional tax sometime after making a mechanical

adjustment to petitioner’s return upon its initial processing is

of no moment.8   The fact of the matter is that respondent sent


     8
        See sec. 68, imposing an overall limitation on itemized
deductions, and sec. 6213(b)(1), permitting summary assessments
                                                   (continued...)
                               - 7 -

petitioner the notice of deficiency within the applicable statute

of limitations.   See sec. 6501(a).    Assuming arguendo that

petitioner might have a claim for abatement of interest, such

claim is not cognizable in an action for redetermination of

deficiency.   See sec. 6404(e), (h); Rule 280(b); see generally

tit. XXVII, Tax Court Rules of Practice and Procedure, regulating

actions for review of failure to abate interest; see also Bax v.

Commissioner, 13 F.3d 54, 56-57 (2d Cir. 1993) (Tax Court

ordinarily lacks jurisdiction to consider interest on a

deficiency in the context of an action for redetermination of

deficiency); Pen Coal Corp. v. Commissioner, 107 T.C. 249, 255

(1996) (same).

     To reflect our disposition of the disputed issue, as well as

the parties’ concessions, see supra note 2,



                                            Decision will be entered

                                      for respondent as to the

                                       deficiency in income tax and

                                       for petitioner as to the

                                       accuracy-related penalty under

                                       section 6662(a).




     8
      (...continued)
arising out of mathematical or clerical errors.
