The opinion
T.C. Memo. 1995-470
UNITED STATES TAX COURT
HAROLD L. AND GLADYS M. HUMBERSON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10066-93. Filed October 3, 1995.
Harold L. Humberson, pro se.
Alan R. Peregoy, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
DAWSON, Judge: This case was assigned to Special Trial
Judge Robert N. Armen, Jr., pursuant to the provisions of section
7443A(b)(4) of the Internal Revenue Code of 1986, as amended, and
Rules 180, 181, and 183.1 The Court agrees with and adopts the
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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Opinion of the Special Trial Judge, which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
ARMEN, Special Trial Judge: Respondent determined a
deficiency in petitioners' Federal income tax for the taxable
year 1990 in the amount of $33,676.17. This amount includes the
10-percent additional tax imposed by section 72(t) on early
distributions from qualified retirement plans.
The pivotal issue for decision is whether the Transfer
Refund distribution received by petitioner Harold L. Humberson in
1990 from the Maryland State Teachers' Retirement System
qualifies for forward averaging under section 402(e)(1). The
resolution of this issue turns on whether the Transfer Refund
distribution constitutes a "lump sum distribution" within the
meaning of section 402(e)(4)(A).
Also for decision are: (1) Whether petitioners are liable
for the 10-percent additional tax imposed by section 72(t) on an
early distribution from a qualified retirement plan; and, if
petitioners are liable for any deficiency in tax, (2) whether
they are liable for interest on such deficiency.
FINDINGS OF FACT
Some of the facts have been stipulated, and they are
generally so found.2 Petitioners resided in Grantsville,
Maryland, at the time their petition was filed with the Court.
2
See infra notes 4 and 5. See also infra note 17 regarding
respondent's claim of an increased deficiency.
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Petitioner Harold L. Humberson (petitioner) was a teacher
with the Garrett County, Maryland, Public School System. During
the course of his teaching career, petitioner taught a variety of
subjects at various grade levels at different schools throughout
the county.
Petitioner's Transfer Refund Distribution
During most of his teaching career, petitioner was a member
of the Teachers' Retirement System of the State of Maryland (the
Retirement System). However, on January 30, 1990, petitioner
elected to transfer to the Teachers' Pension System of the State
of Maryland (the Pension System).3 Petitioner's election to
transfer from the Retirement System to the Pension System was
effective March 1, 1990.
The Retirement System is a qualified defined benefit plan
under section 401(a) that requires mandatory nondeductible
employee contributions. The Pension System is also a qualified
defined benefit plan under section 401(a), but generally does not
require mandatory nondeductible employee contributions. The
State of Maryland contributes to both the Retirement System and
the Pension System on behalf of the members of those systems.
The trusts maintained as part of the Retirement System and the
3
For a discussion of the Retirement System and the Pension
System, see generally Hylton v. Commissioner, T.C. Memo. 1995-27;
Hoppe v. Commissioner, T.C. Memo. 1994-635; Hamilton v.
Commissioner, T.C. Memo. 1994-633; Maryland State Teachers
Association v. Hughes, 594 F. Supp. 1353, 1357-1358 (D. Md.
1984).
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Pension System are both exempt from taxation under section
501(a).
As previously indicated, petitioner elected to transfer from
the Retirement System to the Pension System on January 30, 1990.
On the application to transfer, petitioner specifically opted to
receive, in a lump sum, the distribution to which he was entitled
upon transferring from the Retirement System to the Pension
System.
As a result of the election to transfer, petitioner received
a distribution (the Transfer Refund) from the Retirement System
in the amount of $158,680.98.4 Of this amount, $158,446.20 was
paid to petitioner by check dated March 31, 1990, from the
Maryland State Retirement Systems and the balance, or $234.78,
was paid by check dated May 31, 1990.
Petitioner's Transfer Refund of $158,680.98 includes
$21,765.02 in previously taxed contributions and $136,681.18 of
earnings.5 The earnings represent interest and constitute the
taxable portion of that part of the Transfer Refund that was paid
4
The parties stipulated that the Transfer Refund amounted
to $158,680.96. The documentary record clearly reveals, however,
that the correct amount is $158,680.98.
5
So stipulated. The sum of these two amounts equals
$158,446.20, which is the amount of the check dated March 31,
1990, from the Maryland State Retirement Systems. Although the
record is not completely clear regarding the status of the
balance of the Transfer Refund, i.e., the $234.78 amount that was
paid to petitioner by check dated May 31, 1990, it would appear
that this amount represents taxable employer "pickup"
contributions. See sec. 414(h).
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to petitioner in March 1990.
Petitioner did not ultimately roll over the Transfer Refund
into either an individual retirement account or an individual
retirement annuity.6
At the time that petitioner transferred from the Retirement
System to the Pension System, he had attained the age of 57. If
petitioner had not transferred to the Pension System but had
remained a member of the Retirement System, he would have been
entitled to retire and receive a normal service retirement
benefit, including a regular monthly annuity, under the
Retirement System. He would not have been entitled to receive a
Transfer Refund, however, because a Transfer Refund is payable
only as a consequence of transferring from the Retirement System
to the Pension System.
Also as a consequence of transferring from the Retirement
System to the Pension System, petitioner became a member of the
Pension System. As a member of the Pension System, petitioner
became entitled to receive a retirement benefit based upon his
salary and his creditable years of service, specifically
including those years of creditable service recognized under the
6
Petitioner initially rolled over the Transfer Refund into
an individual retirement account. Thereafter, in July 1990, the
Internal Revenue Service ruled that a transfer refund
distribution did not qualify for rollover treatment. Upon
learning of the ruling, petitioner withdrew the Transfer Refund
from his IRA and invested it elsewhere. As discussed infra,
petitioner reported the Transfer Refund as ordinary income on his
1990 Federal income tax return.
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Retirement System.7 However, because petitioner received the
Transfer Refund on account of transferring from the Retirement
System to the Pension System, the monthly annuity that petitioner
would receive upon retiring from the Pension System was less than
the monthly annuity that he would have received if he had not
transferred to the Pension System but had retired under the
Retirement System.
Petitioner's Retirement
On February 28, 1990, after he had elected to transfer from
the Retirement System to the Pension System, petitioner executed
a Letter of Intent in which he advised the Garrett County Board
of Education of his intent to retire by July 1, 1990.
Subsequently, on May 7, 1990, petitioner applied to the Maryland
State Retirement Systems for a normal service retirement from the
Pension System effective July 1, 1990. Two days later, on May 9,
1990, petitioner tendered his resignation to the Garrett County
Board of Education effective July 1, 1990.
Petitioner retired effective July 1, 1990, after nearly 30
years of service working as a teacher. At that time petitioner
was 58 years old.
As a result of his retirement, petitioner is receiving a
normal service retirement benefit from the Pension System based
7
Petitioner became a member of the Retirement System upon
his employment by the Garrett County Board of Education. He
remained a member of the Retirement System for all but the last
few months of his teaching career.
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upon his salary and his creditable years of service, specifically
including those years of creditable service recognized under the
Retirement System. However, as previously indicated, because
petitioner received the Transfer Refund on account of
transferring from the Retirement System to the Pension System,
petitioner's monthly annuity is less than the monthly annuity
that he would have received if he had not transferred to the
Pension System but had retired under the Retirement System.
Petitioner's 1990 income tax return
Petitioner received a corrected Form 1099-R (Total
Distributions From Profit-Sharing, Retirement Plans, Individual
Retirement Arrangements, Insurance Contracts, Etc.) from the
Maryland State Retirement Agency for 1990. The Form 1099-R
reported the payment of the Transfer Refund in the amount of
$158,680.98. The form also reported that the taxable portion of
the Transfer Refund was $138,228.88 and that petitioner's
previously taxed contributions amounted to $20,452.10.8
On their income tax return for 1990, petitioners reported as
ordinary income the taxable portion of the Transfer Refund, as
8
The discrepancy between the taxable portion of the
Transfer Refund as reported on the Form 1099-R, i.e.,
$138,228.88, and the taxable portion as stipulated by the parties
of that part of the Transfer Refund that was paid to petitioner
in March 1990, i.e., $136,681.18, is unexplained in the record.
Similarly, the discrepancy between the amount of petitioner's
previously taxed contributions as reported on the Form 1099-R,
i.e., $20,452.10, and petitioner's previously taxed contributions
as stipulated by the parties, i.e., $21,765.02, is also
unexplained in the record. In both instances, we accept the
parties' stipulation.
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set forth on the Form 1099-R, and elected 10-year forward
averaging under section 402(e)(1). In this regard, petitioners
attached Form 4972 (Tax on Lump-Sum Distributions) to their
income tax return and reported on said form ordinary income in
the amount of $138,229, i.e., the taxable portion of the Transfer
Refund as set forth on the Form 1099-R. Petitioners then
computed the tax on said amount and included such tax as part of
their total income tax liability on page 2 of their Form 1040.
Respondent's Notice of Deficiency
In the notice of deficiency, respondent determined that
petitioners do not qualify for 10-year forward averaging.
Accordingly, respondent treated the taxable portion of the
Transfer Refund, which she determined to be $136,094.23, as
subject to the regular income tax.9 Respondent also determined
that petitioners are liable for the 10-percent additional tax
imposed by section 72(t) based on the distribution in the
foregoing amount.
OPINION
Respondent contends that the Transfer Refund does not
qualify for forward averaging because it does not constitute a
"lump sum distribution" within the meaning of section
9
The discrepancy between the taxable portion of the
Transfer Refund as determined in the notice of deficiency, i.e.,
$136,094.23, and the taxable portion as stipulated by the parties
of that part of the Transfer Refund that was paid to petitioner
in March 1990, i.e., $136,681.18, is unexplained in the record.
We accept the parties' stipulation.
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402(e)(4)(A). Respondent also contends that petitioners are
liable for the 10-percent additional tax imposed by section 72(t)
because the Transfer Refund constitutes an early distribution
from a qualified retirement plan. Petitioners disagree.
Lump Sum Distribution Issue
As a general rule, a distribution from a qualified plan,
such as the Retirement System, is taxed to the recipient in the
year distributed under the rules relating to annuities. Sec.
402(a)(1); see sec. 72. However, section 402(e)(1) provides a
preferential forward averaging method of computing the tax on
certain such distributions. The parties agree that petitioners
are entitled to this preferential method of computing the tax on
the Transfer Refund if the Transfer Refund constitutes a "lump
sum distribution" within the meaning of section 402(e)(1)(A).10
A lump sum distribution, for purposes of section 402, is
defined in section 402(e)(4)(A) as follows:
(A) Lump sum distribution.--For purposes of this
section * * * , the term "lump sum distribution" means
the distribution or payment within one taxable year of
10
The Tax Reform Act of 1986 replaced the 10-year forward
averaging method with a 5-year forward averaging method for lump
sum amounts distributed after Dec. 31, 1986, in taxable years
ending after such date. Tax Reform Act of 1986, Pub. L. 99-514,
sec. 1122(a)(2), (h)(1), 100 Stat. 2085, 2466, 2470. However,
Tax Reform Act of 1986, secs. 1122(h)(5) and 1124 provide
transitional rules under which lump sum distributions made after
Dec. 31, 1986, will nevertheless continue to qualify, under
certain limited circumstances, for the more generous 10-year
forward averaging method; 100 Stat. 2085, 2471, 2475. Because of
his age, petitioner falls within the scope of the transitional
rules, provided, of course, that the Transfer Refund qualifies as
a lump sum distribution.
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the recipient of the balance to the credit of an
employee which becomes payable to the recipient--
(i) on account of the employee's death,
(ii) after the employee attains age 591/2,
(iii) on account of the employee's separation from the
service, or
(iv) after the employee has become disabled * * *
from a trust which forms a part of a plan described in
section 401(a) and which is exempt from tax under
section 501 * * * . For purposes of this subsection,
the balance to the credit of the employee does not
include the accumulated deductible employee
contributions under the plan (within the meaning of
section 72(o)(5)). [Emphasis added.]
There is no dispute that the Retirement System is a plan
described in section 401(a) and that the trust forming a part
thereof is exempt from tax under section 501. Moreover, there is
no dispute that the Transfer Refund distribution was made within
a single taxable year. Therefore, we must decide (1) whether
petitioner received the "balance to the credit" when he received
the Transfer Refund and (2) whether the Transfer Refund became
payable to petitioner "on account of the employee's separation
from the service".
In support of her determination that petitioner did not
receive the "balance to the credit" when he transferred from the
Retirement System to the Pension System, respondent relies on the
fact that petitioner's years of creditable service under the
Retirement System carried over to the Pension System, see Md.
Ann. Code, art. 73B, sec. 144(4) (1988), and on the related fact
that those years of service increased the monthly annuity benefit
to which petitioner is entitled.
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By contrast, petitioners contend that petitioner received
the entire account balance from the Retirement System when he
received the Transfer Refund.11 Therefore, petitioners conclude
that the "balance to the credit" requirement of section
402(e)(4)(A) is satisfied.
We begin our analysis with section 402(e)(4)(C). That
section provides, in relevant part, as follows:
(C) Aggregation of certain trusts and plans.--For
purposes of determining the balance to the credit of an
employee under subparagraph (A)--
(i) all trusts which are part of a plan shall
be treated as a single trust, all pension
plans maintained by the employer shall be
treated as a single plan * * * . [Emphasis
added.]
During the years in issue, the State of Maryland maintained
both the Retirement System, in which petitioner participated
until March 1, 1990, and the Pension System, to which petitioner
transferred effective as of that date. Accordingly, in order to
decide whether petitioner received the "balance to the credit",
we must treat the Retirement System and the Pension System as a
single pension plan. Sec. 402(e)(4)(C).
Under Maryland law, petitioner's annuity under the Pension
11
Respondent appears to concede implicitly that the
Transfer Refund included all of petitioner's contributions and
the earnings thereon. Cf. Wheeler v. Commissioner, T.C. Memo.
1993-561 (a member of the Retirement System did not receive the
"balance to the credit" upon receiving a Transfer Refund; a
portion of the member's contributions was transferred from the
Retirement System to the Pension System).
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System is calculated by taking into account petitioner's "average
final compensation" and petitioner's years of "creditable
service". Md. Ann. Code, art. 73B, sec. 145(2) (1988). Because
section 402(e)(4)(C) requires that we treat the Retirement System
and the Pension System as a single pension plan, we conclude
that, by transferring from the Retirement System to the Pension
System, petitioner did not forfeit his right to a future monthly
annuity, but simply elected to receive an initial single payment
to be followed by a reduced monthly annuity. Effectively,
petitioner's transfer allowed him to receive the "balance to the
credit" in two parts, an initial single payment to be followed by
a reduced monthly annuity, based on all of his years of
creditable service, and on his salary during those years. See
Green v. Commissioner, T.C. Memo. 1994-340.
The testimony of petitioner at trial reflects the foregoing.
Thus:
Q: * * * And you transferred to that Pension
System from the Retirement System in 1990; is that
correct?
A: Yes, sir.
Q: Okay. Do you know how your pension annuity is
currently calculated?
A: It's calculated on your number of years in
service and what your salary was.
Q: Okay. And do you know that your annuity was
calculated based on all of the years of service that
you had, the entire time you've been employed with the
State of Maryland?
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A: Yes, sir.
Q: So that those years would include the years of
which you are a member of the Retirement System; is
that correct?
A: Yes.
Q: Thank you. And do you also know that the
benefit in particular that you are now receiving under
the Pension System is calculated based on all of those
years? It's stipulated in paragraph 18, that the
benefit you're receiving in the Pension System is
calculated by including the years of creditable service
recognized under the Retirement System. That's your
understanding of what you're receiving now, correct?
A: Yes, sir.
In an effort to counter the foregoing, petitioners contend
that IRS Publication 575 (Pension and Annuity Income) and IRS
Publication 590 (Individual Retirement Arrangements), as well as
explications of those publications by the Maryland State
Retirement and Pension Systems, support petitioners' position
that the Transfer Refund constitutes a "lump sum distribution".
This contention, however, is contrary to the well-established
principle that the authoritative sources of Federal tax law are
the statutes, regulations, and judicial decisions, and not
informal publications authored by the Internal Revenue Service or
others. Zimmerman v. Commissioner, 71 T.C. 367, 371 (1978),
affd. without published opinion 614 F.2d 1294 (2d Cir. 1979);
Green v. Commissioner, 59 T.C. 456, 458 (1972). A fortiori,
explications of such publications by a Maryland State agency are
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similarly not authoritative.12
Petitioners also contend that the alleged failure by the
administrator of the Retirement Plan to provide the written
explanation required by section 402(f) is somehow attributable to
respondent and requires respondent to assume the burden of proof.
The short answer to this contention is that we have decided the
issue in dispute without regard to the burden of proof. In any
event, section 402(f) imposes a duty on plan administrators and
not on the Commissioner.13
Petitioners complain that neither the taxable amount of the
Transfer Refund nor the amount of petitioner's previously taxed
contributions has ever been precisely determined. Here we can
12
We observe that the IRS publications and the explications
thereof by the State agency are consistent with our analysis as
set forth above. For example, the agency describes a lump sum
distribution as "the distribution or payment within one tax year
of an employee's entire balance * * * from all of the employer's
qualified pension plans * * *." (Emphasis added.) IRS
Publication 590 describes a lump sum distribution similarly:
"Generally, a lump-sum distribution must include your complete
share * * * in all of your employer's pension plans." (Emphasis
added.)
We also observe that the Transfer Refund is not a lump sum
distribution for internal revenue purposes merely because it may
have been considered to be a "lump sum distribution" for purposes
of the Maryland State Teachers' Retirement System. For internal
revenue purposes, the term "lump sum distribution" is a term of
art and is expressly defined by section 402(e)(4)(A). For
internal revenue purposes, any other definition of the term is
simply irrelevant.
13
Moreover, it does not appear that the Transfer Refund was
even eligible for rollover treatment. See Dorsey v.
Commissioner, T.C. Memo. 1995-97; Brown v. Commissioner, T.C.
Memo. 1995-93.
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appreciate petitioners' frustration because, although these
amounts have not differed dramatically, they have not remained
constant throughout the administrative and pretrial stages of
this case. Nevertheless, petitioners ultimately stipulated to
the relevant amounts, and our findings are based on the parties'
stipulation.14
In view of the foregoing, we hold that the Transfer Refund
did not constitute a lump-sum distribution within the meaning of
section 402(e)(4)(A) because petitioner did not receive the
"balance to the credit" when he transferred from the Retirement
14
See supra note 5 and the associated text. We observe
that the Court offered to reopen the record after trial in order
to accommodate a revised stipulation. However, nothing was ever
forthcoming from the parties.
Of perhaps even greater significance is the fact that the
decision to be entered herein will reflect the deficiency as
determined by respondent and not an increased deficiency. See
infra note 17. In this regard we observe that the deficiency as
determined by respondent effectively credits petitioner with
previously taxed contributions in the amount of $22,586.75,
rather than the $21,765.02 amount that was stipulated by the
parties. As shown in the following table, the taxable amount of
the Transfer Refund, based on the amount of petitioner's
previously taxed contributions as credited in the notice of
deficiency, is less than it would be if the stipulated amount
were used:
Taxable Amount of Transfer Refund Taxable Amount of Transfer Refund
Per Notice of Deficiency Per Stipulation
Transfer Refund $158,680.98 Transfer Refund $158,680.98
less: Previously less: Previously
taxed contributions -22,586.75 taxed contributions -21,765.02
1
Taxable Amount $136,094.23 Taxable Amount $136,915.96
1
This amount consists of $136,681.18 of earnings on petitioner's previously taxed
contributions and $234.78 of employer "pick-up" contributions. See supra note 5 and
the associated text.
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System to the Pension System.15 Accordingly, the Transfer Refund
received by petitioner does not qualify for forward averaging
under section 402(e)(1). See Hamilton v. Commissioner, T.C.
Memo. 1994-633 (addressing whether a taxpayer had received the
"balance to the credit" in the context of whether the taxpayer
was entitled to compute tax on a transfer refund using the 10-
year forward averaging method set forth in section 402(e)(1));
Hoppe v. Commissioner, T.C. Memo. 1994-635 (same); Pumphrey v.
Commissioner, T.C. Memo. 1995-469 (same); see also Dorsey v.
Commissioner, T.C. Memo. 1995-97 (addressing whether a taxpayer
had received the "balance to the credit" in the context of
whether a Transfer Refund distribution qualified for tax-free
rollover treatment under section 402(a)(5); Brown v.
Commissioner, T.C. Memo. 1995-93 (same); cf. Wheeler v.
Commissioner, T.C. Memo. 1993-561.
In closing, we note that in a case decided earlier this
year, the United States District Court for the District of
Maryland reached the same conclusion in respect of the lump sum
15
In view of our conclusion that petitioner did not receive
the "balance to the credit" when he transferred from the
Retirement System to the Pension System, we are not required to
decide whether the Transfer Refund became payable to petitioner
on account of his separation from the service. We note, however,
that we have previously held in other cases, on facts
indistinguishable from those herein, that a transfer refund
distribution is not paid on account of an employee's separation
from the service, but rather on account of the employee's
election to transfer from the Retirement System to the Pension
System. Dorsey v. Commissioner, supra; Brown v. Commissioner,
supra; Hylton v. Commissioner, T.C. Memo. 1995-27.
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distribution issue that this Court has reached. Sites v. United
States, 75 AFTR 2d 95-2504, 95-1 USTC par. 50,280 (D. Md. 1995).
The final paragraph of the district court's analysis deserves to
be quoted:
The Court believes that the statutory analysis and
reasoning of Hoppe [v. Commissioner, T.C. Memo. 1994-
635] is sound. Because the Retirement System and
Pension System were both maintained by Taxpayer's
employer, the State of Maryland, they are to be
aggregated for purposes of determining the "balance to
the credit" of an employee under section 402(e)(4)(A).
Whereas Taxpayer received a refund of his contributions
and the accumulated interest, his service credits were
transferred to and remained within the Pension System.
* * * By choosing to transfer to the Pension System, *
* * [Taxpayer] opted * * * to receive a refund of his
contributions and accumulated interest along with
reduced annuity payments in the future. Thus, in
effect, Taxpayer elected to receive the "balance to the
credit" of his account in two-parts: the refund payment
and the future annuity payments. Consequently, he did
not receive the "balance to the credit" of his account
on * * * [the Transfer Refund date]. Id. [75 AFTR 2d
95-2504, 95-1 USTC par. 50280 at 88,031].
Section 72(t) Additional Tax Issue
We turn next to respondent's determination that petitioners
are liable for the 10-percent additional tax imposed by section
72(t).
Section 72(t) provides for a 10-percent additional tax on
early distributions from qualified retirement plans. Subsection
(1), which imposes the tax, provides in relevant part as follows:
(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 such amount which is includible in gross
income.
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By virtue of subparagraph (2)(A) of section 72(t), the 10-
percent additional tax does not apply to certain distributions.
Specifically, petitioners rely on clause (2)(A)(v), which
provides that the 10-percent additional tax does not apply to
distributions "made to an employee after separation from service
after attainment of age 55". (Emphasis added.) However, this
clause does not apply in the present case because the Transfer
Refund was paid to petitioner well before, and not after, he
separated from service.16
Even though the result we reach here may seem harsh to
petitioners, we may not ignore the plain language of the statute
and, in effect, rewrite it in order to achieve what might be
viewed by them as the more equitable result. See Hildebrand v.
Commissioner, 683 F.2d 57, 58 (3d Cir. 1982), affg. T.C. Memo.
1980-532; Zadan v. Commissioner, T.C. Memo. 1993-85. After all,
the power to legislate is exclusively the power of Congress and
not of this Court or any other. See Iselin v. United States, 270
U.S. 245, 250 (1926).
In view of the foregoing, we sustain respondent's
determination that petitioners are liable for the 10-percent
16
We also observe that the Transfer Refund was paid to
petitioner "on account of" his election to transfer from the
Retirement System to the Pension System and not "on account of"
his separation from the service. See Hylton v. Commissioner,
T.C. Memo. 1995-27 (addressing the maxim "causa causae est causa
causati"); see also Adler v. Commissioner, T.C. Memo. 1995-148,
on appeal (4th Cir. 1995); Dorsey v. Commissioner, 1995-97; Brown
v. Commissioner, T.C. Memo. 1995-93.
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additional tax imposed by section 72(t). See O'Connor v.
Commissioner, T.C. Memo. 1994-170; Wheeler v. Commissioner, T.C.
Memo. 1993-561; cf. Dorsey v. Commissioner, T.C. Memo. 1995-97;
Brown v. Commissioner, T.C. Memo. 1995-93.
Interest
Finally, having concluded that petitioners are liable for
the deficiency in income tax, including the 10-percent additional
tax imposed by section 72(t), we address petitioner's contention
that they should be relieved of liability for interest on the
deficiency.
Petitioners impressed the Court as honest and conscientious
taxpayers. Unfortunately, they experienced some frustration
during the examination of their 1990 income tax return. Although
the Court can appreciate petitioners' frustration, we must
nevertheless note that matters involving interest do not, as a
general rule, fall within the scope of this Court's jurisdiction.
Perkins v. Commissioner, 92 T.C. 749, 752 (1989); LTV Corp. v.
Commissioner, 64 T.C. 589, 597 (1975); see sec. 6404(e); Marine
v. Commissioner, 92 T.C. 958, 994 (1989), affd. without published
opinion 921 F.2d 280 (9th Cir. 1991); 508 Clinton St. Corp. v.
Commissioner, 89 T.C. 352 (1987). Although there are certain
narrowly defined exceptions to this rule, none of them apply in
this case. See, e.g., sec. 7481(c); Bax v. Commissioner, 13 F.3d
54 (2d Cir. 1993). In short, it is simply not within our power
in this case to relieve petitioners from any part of the interest
on the deficiency that will be due.
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Conclusion
In order to give effect to our disposition of the disputed
issues,
Decision will be entered
for respondent.17
17
On brief, respondent laconically claims an increased
deficiency. Sec. 6214(a). See supra notes 9, 14. However, we
think such claim was not properly raised, and we will not allow
it.