And all the rest of it, as the Swan of Avon put it in Act II, Scene vii.

Well, we’ve got plenty of winter wind, and it’s blowing pretty good here in The City That Never Sleeps. So I decided to follow the lead of the Federales, including but without in any way limiting the generality of the foregoing, as my canceled-out-of-Com’r-Koskinen’s-lunchtime-remarks-tomorrow colleagues would say, the crowd at 400 Second Street, NW, who can teletubby today if they wish.

I’m teletubbying today my own self. For the benefit of readers seeking a glossary (see my blogpost “Maybe Not So Obvious – Part Deux”, 1/22/15), the Federales call it “telework”; I prefer “teletubby”, as it involves sitting at one’s computer or smartphone as opposed to bestirring oneself and venturing abroad.

Now that the overture is finished, here is the mini-opera. It’s Dennison R. Heuer, Jr., Docket No. 5076-14, filed 1/26/15, an off-the-bencher from Judge Kathleen Kerrigan.

Here’s a fine example of “man’s ingratitude” and indeed the winter sky is not as biting as “benefits forgot.”

Denni plunders his 401(k) to the extent of $69K, but hadn’t reached the 59-1/2 year safe harbor. He did report the income (he got a 1099-R) and prepared his own return, being one of a dwindling band who does.

But Denni left off the 10% Section 72(t) addition or penalty or whatever it is. IRS hits Denni with the 10% plus the 20% five-and-ten substantial understatement chop.

Denni claims hardship.

“Petitioner contends that he made the withdrawal from his 401(k) due to financial hardship. He testified that by making the withdrawal he was able to retain his employees and eventually sell his company. He testified further that the new owners of his company retained the employees. Without making the withdrawal from his retirement account, petitioner believed that he would be unemployed.” Order, at p. 6.

Tough, Denni, says Judge Kerrigan. “We have considered similar claims in the past and have observed that there is no authority in the Code, the legislative history, or caselaw for a general financial hardship exception to the imposition of the 10% additional tax on early distributions. While we are sympathetic to petitioner’s position, the Court may not add an exception to section 72(t) by judicial fiat and we are obliged to apply the law as written.” Order, at pp. 6-7 (Citations omitted).

But Denni’s tale is not solely one of woe.

“Petitioner prepared and filed his own tax returns. This is not a situation of omission of income or an exaggeration of deductions, but rather the proper reporting of income governed by the Code, the regulations, and the interpretation of the relevant statutory provisions by numerous cases. On the record before us, we are satisfied that petitioner acted in good faith and with reasonable cause with respect to that portion of the underpayment relating to the 10% additional tax under section 72(t).” Order, at p. 8. (Citation omitted).

Denni gets hit with the 10% addition, but not the 20% chop.