The ‘Any Means ANY’ Case

http://ustaxcourt.gov/InOpHistoric/GallantSummary.SUM.WPD.pdf


Taxpayers were both active participants in their employers’ retirement plans yet spouse also made a $5000 IRA contributions and deducted it on the tax return. In fairness, spouse had only contributed approx $200 to employer’s plan. Taxpayer’s income precluded the deductibility of the IRA contribution under the circumstances. Taxpayer tried to claim the $200 as taxable in order to obtain the $5k deduction.

Take aways

• If an employee makes “a voluntary or mandatory contribution to an employer pension plan such employee is an active participant in the plan for the taxable year in which such contribution is made.” Even de minimis participation is sufficient to render a taxpayer an active participant.

• This is another case where taxpayer tried to utilize his/her own rationale vs. the tax laws. The Court must enforce the laws as written and interpreted. “While the result to petitioner seems harsh, we cannot ignore the plain language of the statute and, in effect, rewrite this statute to achieve what would appear to be an equitable result.”