2005 Tax Ct. Summary LEXIS 75">*75 PURSUANT TO INTERNAL REVENUE CODE SECTION 7463(b), THIS OPINION MAY NOT BE TREATED AS PRECEDENT FOR ANY OTHER CASE.
POWELL, Special Trial Judge: This case was heard pursuant to the provisions of
Respondent determined a deficiency of $ 6,079 and an accuracy-related penalty under
Background
Petitioner (Frederick W. Haas) was a chemical engineer and was employed by various chemical companies. In 1977, he was employed by British Petroleum (BP) and was employed by BP for a number of years. In 1992, he was employed by OHM Remediation (OHM), a leader in the cleaning up of high hazard chemical spills. OHM was bought by IT Corporation (IT) in 1998.
During his years as a chemical engineer petitioner was exposed to various chemicals and became sensitive to various chemicals. In February 2000, petitioner's doctor wrote that petitioner "should avoid direct exposure to known liver toxins. He may, however, participate in site surveys where the level of protection recommended is Level C or Level D." On April 18, 2001, petitioner was told that his2005 Tax Ct. Summary LEXIS 75">*77 physical examination results were in the normal limits range, but he was "restricted from exposure to known liver toxins."
In 2002, IT went bankrupt and petitioner's employment was terminated. After IT went into bankruptcy, petitioner could not find employment similar to that which he had. He attended North Georgia College and State University, became qualified as a high school teacher, and became a teacher in August 2003.
During 2001, petitioner withdrew $ 56,250 from a section 401(k) retirement plan (the distribution). At that time he had not reached age 59-1/2. Petitioners reported the distribution on their joint 2001 Federal income tax return, but did not report any additional tax under
Discussion
(1) Imposition of additional tax.--If any taxpayer receives any amount from a qualified retirement plan * * * the taxpayer's tax under this chapter for the taxable year in which such amount is received shall be increased by an amount equal to 10 percent of the portion of such2005 Tax Ct. Summary LEXIS 75">*78 amount which is includible in gross income. (2) Subsection not to apply to certain distributions.--Except as provided in paragraphs (3) and (4), paragraph (1) shall not apply to any of the following distributions: (A) In general.--Distributions which are-- * * * * (iii) attributable to the employee's being disabled within the meaning of subsection (m)(7) * * *.
(7) Meaning of disabled.--For purposes of this section, an individual shall be considered to be disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinate duration. An individual shall not be considered to be disabled unless he furnishes proof of the existence thereof in such form and manner as the Secretary may require.
2005 Tax Ct. Summary LEXIS 75">*79 Petitioners agree that there was a distribution during the taxable year 2001 and that the distribution was taxable. The question solely concerns whether the
Petitioners maintain that petitioner was disabled within the meaning of
Petitioner points to communications with IT personnel in March and April of 2000 where it was determined that he should not go on certain projects. But also during 2000, he was still going out on projects. In 2002, when IT went into bankruptcy and petitioner became unemployed, we cannot say his unemployment was due to a disability within the meaning of
Petitioners may have been subject to financial hardship during 2001; there is, however, no exception under
Reviewed and adopted as the report of the2005 Tax Ct. Summary LEXIS 75">*81 Small Tax Case Division.
Decision will be entered for respondent with respect to the deficiency, and decision will be entered for petitioner with respect to the
1. Unless otherwise indicated, subsequent section references are to the Internal Revenue Code in effect for the year in issue.↩
2. Petitioners concede that they omitted from gross income $ 1,280 (State income tax refund), $ 26 (interest income from State Farm Life Insurance Co.), and $ 254 (interest income from the U.S. Treasury Dept.). Respondent concedes the
