ID: Office: UILC: CCA_2009041612260450 ------------------------- 72.20-03 Number: 200922041 Release Date: 5/29/2009 From: -------------------- Sent: Thursday, April 16, 2009 12:26:07 PM To: ------------------- Cc: ------------------------------------- S ubject: RE: 72(t) Additional Tax There are court cases that discuss what constitutes disability under section 72(m)(7) of the Code. The one that does a nice summary is a Bankruptcy case, In Re Black 204 BR 701 (1996), (cop y attached), that cites among othe r cases Dwy er v. Commissioner, 106 T.C. 337 (1996) (Copy attached). Section 72(m)(7) provides: (7) Meaning of disabled. -- For purposes of this section, an individual shall be considered to be disabled if he is unable to engage in an y s ubstantial gainful a ctivity by reason of any medicall y determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to be disabled unless he furnishes proof of th e existence thereof in such form and manner as the Secretary may require. S. Rept. 93-383, supra at 134, 1974-3 C.B. (Supp.) at 213 states that "Generally it is intended that the proof [of disability ] be the same as where the individual applies for disabil ity pay ments under social security ." The regulations, promulgated pursuant to the statutory authorization contained in section 72(m)(7), provide that an individual will be considered to be disabled if he or she is unable to engage in an y " substantial gainf ul activity" by reason of an y m edically determinable ph ys ical or mental impairment that can be expected to result in death or to be of long-continued and indefinite duration. An individual will not be deemed disabled if, with reasonable effort and safety to himself, the impairment can be diminished to the extent that the individual will not be prevented by the impairment from engaging in his customary or an y other comparable substantial gainful activity. Section 1.72-17(f)(4) of the regulations. Thus, the individual has to establish that he was not able to work in the year of the distribution at an activity comparable to the one in which he customaril y en gage, and if he can meet the criteria of the regulations he would be considered disable as defined in se ction 72(m)(7). See Dwy er v. Commissioner, 106 T.C. 337 (1996). I think the Dwy er v. Commissioner case is applicable to your case. If you have an y other questions you can call me at