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 $1,669 in petitioners' 1999 Federal income tax.
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 Miami, Florida.
During the year at issue, petitioner was employed as an automobile salesman by Carmax. He began his employment with Carmax sometime during 1998 and terminated his employment with that employer on August 22, 1999, because of his need to have several surgeries. He worked approximately 1-1/2 years with Carmax. As an employee of Carmax, petitioner was an active participant in two Circuit City Stores, Inc., retirement plans: the Retirement Plan of Circuit City Stores, Inc., and the Circuit City Stores, Inc. 401K Plan.3
At the time petitioner's employment with Carmax terminated on August 22, 1999, petitioner qualified pension plan. In such a case, for married taxpayers who file a joint return, the deduction allowable with respect to either spouse is reduced under a formula prescribed in section 219(g)(2) and (3). That formula generally provides for a phaseout of the deductible amount of the IRA where, for the year 1999, the joint income of the taxpayers exceeds $61,000. Felber v. Commissioner , T.C. Memo. 1992-418, affd. without published opinion 998 F.2d 1018 (8th Cir. 1993). In this case, petitioners' joint income (after their concession of unreported income) totaled $67,638. Under the statutory formula cited, petitioner is not entitled to an IRA deduction for 1999. Petitioner's sole contention is that, because he was not vested in the two plans of his former employer, and his amounts in those plans were forfeited when he terminated his employment, he will never receive any benefits from those plans, and, therefore, he should be allowed a deduction for his IRA contributions for 1999. The answer to that argument is that petitioner was nonetheless an active participant in the two plans of his former employer. He was an active participant because contributions were made to his accounts in the two plans by his former employer. The mere fact that his accounts in these plans were forfeited when his employment terminated, and that he was not vested when his employment terminated, does not change his status as an active participant. Sec. 219(g)(5). A taxpayer is considered an active participant whether or not his rights under a plan are vested or forfeited. Orzechowski v. Commissioner , 69 T.C. 750, 754 (1978), affd. 592 F.2d 677 (2d Cir. 1979). Therefore, because petitioner was an active participant in his former employer's plans during 1999, the claimed IRA deduction for 1999 is not allowable. Respondent is sustained on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered for respondent.