T.C. Summary Opinion 2012-7



                     UNITED STATES TAX COURT



        DOUGLAS M. AND DELANA M. GALLANT, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6935-10S.              Filed January 10, 2012.



     Douglas M. and Delana M. Gallant, pro se.

     Patrick F. Gallagher, for respondent.



     PANUTHOS, Chief 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.   Pursuant to

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

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

precedent for any other case.   Unless otherwise indicated,
                               - 2 -

subsequent section references are to the Internal Revenue Code,

and all Rule references are to the Tax Court Rules of Practice

and Procedure.

     Respondent determined a deficiency of $1,512 with respect to

petitioners’ Federal income tax for 2007.     The sole issue for

decision is whether petitioners are entitled to deduct a $5,000

contribution to an individual retirement account (IRA).

                             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 the petition

was filed, petitioners resided in Massachusetts.

     In 2007 petitioner Douglas M. Gallant was employed by Sun

Microsystems and was an active participant in its qualified

retirement plan under section 401(a).     Douglas M. Gallant

contributed $6,983 to this plan in 2007.

     In 2007 petitioner Delana M. Gallant (hereinafter

petitioner) was employed by Whole Foods Market Group, Inc. (Whole

Foods), and was an active participant in its qualified retirement

plan under section 401(a).   Petitioner contributed $192.87 to

this plan in 2007.   Petitioner also contributed $5,000 to an IRA

in 2007.   Petitioners claimed a deduction of $5,000 on the basis

of the IRA contribution.
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     On December 28, 2009, respondent issued a notice of

deficiency disallowing petitioners’ $5,000 deduction for

contributions to petitioner’s IRA.1      Respondent disallowed the

deduction for petitioner’s contribution to the IRA on the basis

that petitioners were active participants in qualified plans and

that the phaseout provisions of section 219(g) apply.      Respondent

further determined that petitioners’ modified adjusted gross

income (AGI) of $126,578 was greater than the phaseout limitation

in section 219(g) and thus petitioners’ IRA contribution

deduction is reduced to zero.

     Petitioners do not dispute the facts, nor do they generally

disagree with respondent’s determination.      Petitioners assert

that the law affects them unfairly since the very small IRA

contribution allowed to them as active participants results in a

much greater disallowance of the IRA contribution deduction and

adversely affects their ability to save for retirement.

                           Discussion

     With certain limitations, a taxpayer is entitled to deduct

amounts contributed to an IRA.    See sec. 219(a).    The deduction,

however, may not exceed the lesser of (1) $4,000 (or $5,000 for

taxpayers 50 or older) or (2) an amount equal to the compensation

includable in the taxpayer’s gross income.      See sec. 219(b)(1).



     1
      Respondent also determined omitted interest income of $39
which respondent conceded.
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     If, for any part of a taxable year, a taxpayer or the

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

under section 401(a), the deductible amount for that year may be

further limited.   See sec. 219(g)(1), (5)(A)(i).    The IRA

deduction phases out for taxpayers whose modified adjusted gross

income exceeds certain thresholds.     In the case of a married

taxpayer who files a joint Federal income tax return, the $4,000

(or $5,000 for taxpayers 50 or older) limitation of section

219(b)(1) is reduced using a ratio determined by dividing the

excess of the taxpayers’ modified AGI over the applicable dollar

amount, which is $83,000 for 2007, by $20,000.     See sec.

219(b)(5)(A) and (B), (g)(2)(A), (3)(B)(i), (8); Rev. Proc. 2006-

53, sec. 3.21, 2006-2 C.B. 996, 1002; see also Ho v.

Commissioner, T.C. Memo. 2005-133.     Each petitioner was an active

participant in a retirement plan, was married, and filed a joint

Federal income tax return for 2007.     The modified adjusted gross

income on the joint return exceeded $103,000; therefore the

application of section 219(g)(2) and (3) results in the total

disallowance of the IRA contribution deduction.     See Ho v.

Commissioner, supra; see also Wade v. Commissioner, T.C. Memo.

2001-114.

     At trial petitioners asserted that respondent had unfairly

penalized petitioner because the IRS took into account the

adjusted gross income of both petitioners to compute the
                               - 5 -

allowable IRA deduction.   Section 219(g)(3)(B) prescribes two

schedules for the applicable dollar amounts to be used in

determining the reduction or elimination of an IRA contribution

deduction:   (1) Taxpayers filing a joint return and (2) any other

taxpayer (other than a married individual filing a separate

return).   Taxpayers who file jointly are entitled to a higher

ceiling for their AGI than those who file as single or a head of

household, taking into account multiple incomes.   See sec.

219(g)(3)(B); Ho v. Commissioner, supra; Wade v. Commissioner,

supra; Felber v. Commissioner, T.C. Memo. 1992-418, affd. without

published opinion 

 (8th Cir. 1993).

     During the examination petitioners attempted to change

petitioner’s status as an active participant in a qualified plan.

Petitioners submitted an amended return to the IRS reporting the

$192.87 employee contribution as income.2

     If an employee makes “a voluntary or mandatory contribution

to * * * [an employer pension plan] such employee is an active

participant in the plan for the taxable year in which such

contribution is made.”   Sec. 1.219-2(e), Income Tax Regs.    Even



     2
      Although they attempted to revise their position on the
submitted amended return, petitioners stipulated that they were
each active participants in a qualified plan in 2007.
Petitioners did not request nor do we see any reason to accord
them relief from the stipulation. See Rule 91(e); Jasionowski v.
Commissioner, 

, 318 (1976). The facts in this record
clearly lead to the conclusion that petitioner was an active
participant in 2007.
                               - 6 -

de minimis participation is sufficient to render a taxpayer an

active participant.   See Wade v. Commissioner, supra (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).    A taxpayer

who forfeits rights to a balance in a qualified plan does not

thereby negate his or her status as an active participant for the

year in question.   See Eanes v. Commissioner, 

 (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).   The determination of whether an individual is an

active participant shall be made without regard to whether such

an individual’s rights under a plan are nonforfeitable.    Sec.

219(g)(5); see Hildebrand v. Commissioner, 

, 58 (3d

Cir. 1982), affg. T.C. Memo. 1980–532; Eanes v. Commissioner,

supra at 170; see also Wade v. Commissioner, supra.

     The Court must enforce the laws as written and interpreted.

“While the result to petitioner seems harsh, we cannot ignore the

plain language of the statute and, in effect, rewrite this

statute to achieve what would appear to be an equitable result.”

Eanes v. Commissioner, supra at 171.   Rather, we must apply the

language of the relevant provisions, as written.     See

Commissioner v. Lundy, 

, 252 (1996) (courts are
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“bound by the language of the statute as it is written”);

Badaracco v. Commissioner, 

, 398 (1984) (“Courts are

not authorized to rewrite a statute because they might deem its

effect susceptible of improvement.”).

                            Conclusion

     Petitioners were each an active participant in a qualified

retirement plan and as such are subject to the limitations set

forth in section 219.   Respondent’s determination on this issue

is sustained.

     To reflect the foregoing,3


                                            Decision will be entered

                                       under Rule 155.




     3
      Although we hold for respondent on the issue before us, we
leave it to the parties to compute the deficiency under Rule 155
because of respondent’s concession regarding interest income.