Footnotes

¹ Respondent determined a deficiency in petitioners' Federal income tax for the taxable year 1991 in the amount of $9,957.

² and an early withdrawal penalty on the same amount pursuant to section 72(t). OPINION Section 402(a) applies to distributions from any employees' trust described in section 401(a) (including a profit sharing plan) that is exempt from tax under section 501(a). Section 402(a) provides that, subject to certain exceptions not relevant here, any amount distributed from such a trust shall be taxable to the distributee, in the year of distribution, under section 72 (relating to annuities). Section 72(e) provides that an amount not received as an annuity is includable in gross income, except to the extent attributable to an individual's investment in the contract. Petitioner received a distribution from a profit sharing plan.

³ Since none of the exceptions in section 402 apply, section 72 governs the taxability of the distribution. The distribution was not received in the form of an annuity, so section 72(e) requires that the distribution, reduced by a proportionate share of petitioner's investment in the contract,

⁴ be included in gross income. The Form 1099-R received by petitioner excluded a proportionate share of petitioner's investment in the contract. Accordingly, we hold petitioners underreported their gross income by $26,110 in 1991. Section 72(t)(1) imposes an additional tax on any amount received from a qualified retirement plan, including a profit sharing plan, equal to 10 percent of the portion of such amount which is includible in gross income. Section 72(t)(2) exempts distributions from the additional tax if the distributions are made: (1) To an employee age 59-1/2 or older; (2) to a beneficiary (or to the estate of the employee) on or after the death of the employee; (3) on account of disability; (4) as part of a series of substantially equal periodic payments made for life; (5) to an employee after separation from service after attainment of age 55; or (6) as dividends paid with respect to corporate stock described in section 404(k). Petitioner received a distribution from a qualified retirement plan. None of the specifically enumerated exceptions in section 72(t)(2) apply to exempt the distribution from the additional tax. Therefore, we conclude petitioners are liable for the additional tax imposed by section 72(t)(1) on the portion of the distribution includible in gross income. Petitioner asserts that the distribution should be exempt from income tax and/or the additional tax imposed by sections 402(a) and 72. In support of this conclusion, petitioner argues

⁵ that the investment of the distribution in a house with a 30-year mortgage is akin to a retirement account, and therefore, tax free treatment of the distribution comports with the Congressional intent underlying the tax treatment of retirement plans. Cf. Harris v. Commissioner , T.C. Memo. 1994-22 (which is contrary to petitioner's argument). Petitioner further argues that the distribution was made out of necessity, due to petitioners' inability to sell their house, and as such, literal application of the Internal Revenue Code is inappropriate. While we sympathize with petitioners, we are not at liberty to create exceptions to the Internal Revenue Code. It is a wellestablished principle that "exemptions from taxation are not to be implied; they must be unambiguously proved." United States v. Wells Fargo Bank , 485 U.S. 351, 354 (1988). To reflect the foregoing, Decision will be entered for respondent .