California Appeals Office Finds FTB Correctly Applied Early Distribution Tax to Taxpayer’s Retirement Income

The California Office of Tax Appeals (OTA) Aug. 22 affirmed the Franchise Tax Board’s (FTB) assessment, finding Taxpayer failed to show any error in the assessment of additional tax based on a federal determination. Taxpayer filed a joint individual income tax return. The FTB received information from the Internal Revenue Service showing increased taxable income from a qualifying retirement plan. The FTB determined that Taxpayer failed to apply 2.5 percent early distribution tax to the early retirement distribution reported on the return and issued a notice of proposed assessment. Taxpayer protested, contending that the distribution tax was applicable only to ...