Steven Rudolph Kaldi v. Commissioner, T.C. Summary Op. 2007-45

Kaldi v. Commissioner began as a collection due process hearing due to the I.R.S.’s Final Notice of Intent to Levy. When the I.R.S. issued a Notice of Determination sustaining the levy, Mr. Kaldi filed a petition to the U.S. Tax Court.

The primary issues in the case were the applicability of the 10% early withdrawal penalty. This penalty, referred to as an I.R.C. 72(t) penalty, applies unless an exception exists. The two most commonly used exceptions are 1) distributions made after a taxpayer is 59 ½ years old or 2) the taxpayer is disabled.

The other issue is the taxability of an attempted rollover contribution. In order to complete a valid rollover contribution, the funds must be transferred into another qualified plan. I.R.C. 408(d)(3). One exception to this requirement is when a taxpayer substantially complies with the remaining requirements for a valid rollover. Wood v. Commissioner, 93 T.C. 114 (1989).