: Initial Hearing Decision and Order
: Appeal No. 02-1165
: Acct. No. #####
Auditing Division of the Utah State :
For Petitioner: PETITIONER, and PETITIONER REP
For Respondent: Brent Taylor and Becky McKenzie, Auditing Division
This appeal concerns assessments against Petitioner for tax years 1998 and 1999. In tax years 1998 and 1999, Petitioner took early distributions from his IRA account and applied the distributions to his expenses for higher education. In 1998, Petitioner took a retirement deduction on line 14 of his state return in the amount of $$$$$. The deduction corresponds to Petitioner’s IRA distribution in that year. The 1099-R associated with the distribution indicates a distribution code of “1,” which indicates “early disbursement” of retirement funds. Similarly, Petitioner took a retirement deduction on his 1999 state return. The 1099-R for tax year 1999 also indicates an early distribution in the amount of $$$$$.
The Auditing Division disallowed the deductions because the distributions were not “retirement” distributions within the meaning of section 59-10-114. Consequently, the Division issued assessments again Petitioner for unpaid taxes. Petitioner objected to the assessments, and this matter was argued in an Initial Hearing on October 23, 2002., 
 The Division is aware of another distribution from this retirement account in 1999, but because the distribution was coded as a “7” or “normal distribution,” the Division allowed the deduction for that distribution without further question.
 Petitioner states that the distribution code for this type of withdrawal has changed since the tax years in question. Nevertheless, unless the distribution can be characterized as a normal “retirement” distribution, the question remains whether it is deductible under §59-10-114 of the Utah Code. That issue is not before us here, so we leave it for an appropriate time.
 See IRS publication 575.