Tom Lewis, age 50, withdraws an amount from his IRA to purchase a race horse. All contributions to his IRA by Tom were deductible contributions. Which of the following are the tax consequences for Tom in regard to this IRA withdrawal?

1. Withdrawal amount included in gross income
2. 10% early withdrawal penalty added to total tax

Options:

a) I only

b) Neither I nor II

c) Both I and II

d) II only