Richard C. & Mary Jo Runyan v. Commissioner, T.C. Summary Opinion 2006-58

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U.S. Tax Court

Richard C. & Mary Jo Runyan v. Commissioner

T.C. Summary Opinion 2006-58 · Docket 4124-04S · Decided Apr 19, 2006 · Couvillion · T.C. Summary Opinion

The sole issue for decision is whether petitioners are entitled to a deduction of $5,221 for the year 2001 for a contribution to a retirement plan under section 408(k), commonly referred to as a SIMPLE IRA.

Some of the facts were stipulated. Those facts and the accompanying exhibits are so found and are incorporated herein by reference. Petitioners’ legal residence at the time the petition was filed was Labadie, Missouri. Petitioners were not present at trial but were represented by counsel.

Petitioners filed a timely joint Federal income tax return for 2001, on which they reported the following income: Wages and salaries $299,273 Taxable interest 12,537 Ordinary dividends 1,370 Taxable refunds and credits 235 Schedule C, Trade or Business Income 10,384 Schedule D, Capital Losses (3,000 )

Total income $320,799

On line 29, Self-employed SEP, SIMPLE, and qualified plans, of Form 1040, U.S. Individual Income Tax Return, for the year 2001, petitioners claimed a deduction of $6,788. In the notice of deficiency, respondent determined that $1,567 of that amount was allowable as a SEP contribution, and $5,221 was disallowed. Thus, of the $6,788 claimed on line 29 of their return, $5,221 was not allowed as a qualified plan deduction. The issue, therefore, is whether that $5,221 is allowable as a pension plan In this case, the claimed contribution was in connection with petitioner’s self-employed activity. Thus, the last day of the business year for that activity was December 31, 2001. Petitioners, therefore, were required to make their SIMPLE contribution on or before January 31, 2002. The evidence presented by petitioners at trial, which came from Northwestern Mutual Life Insurance Co., the trustee for the trust, shows that the $6,788 payment by petitioners was received on April 25, 2002, and “Payment Processed on 04/26/2002”. That payment, which includes the $5,221 at issue, was not a timely contribution for the year 2001 as a SIMPLE IRA contribution. Respondent, therefore, is sustained.

Reviewed and adopted as the report of the Small Tax Case

Division.

Decision will be entered for respondent.

Footnotes

¹ The decision to be entered is not reviewable by any other court, and this opinion should not be cited as authority. Respondent determined a deficiency of $3,057 in petitioners’ 2001 Federal income tax.

² Petitioners contend the $5,221 represented a contribution to a SIMPLE IRA. That is the sole issue for decision. Although respondent determined that petitioners had not proven that they paid $5,221 toward a qualified pension plan, petitioners at trial, through their attorney, presented documentation that petitioners had made a payment of $6,788 on April 25, 2002, to Northwestern Mutual Life Insurance Co. Based on that documentation, petitioners maintain that this amount represented a contribution to a qualified plan. The claimed contribution was in connection with the self-employment activity of Richard C. Runyan (petitioner). The documents offered into evidence characterized the $6,788 as a contribution to a simplified employee IRA, which is commonly referred to as a “SEP”. Such a plan is different from a SIMPLE plan or a SIMPLE IRA.

³ Petitioners contend, nevertheless, that they properly established a plan by executing Form 5304-SIMPLE, Savings

⁴ Section 408(p)(5)(A)(i) requires that the contribution to any SIMPLE retirement account must be made not later than the close of the 30-day period following the last day of the month with respect to which the contributions are to be made.

Sections addressed

I.R.C. § 408 Individual retirement accounts
(k) (p) (p)(5)(A)(i)

Also cites

I.R.C. § 7463