Alex Malesa - Page 3

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          returns to determine a deficiency and additions to tax, using a             
          married filing separately status for petitioner.                            
               Petitioner filed a joint 1990 Federal income tax return with           
          his wife on April 15, 1993.  On that return, petitioner included            
          all of the payments that respondent had determined were taxable             
          in the notice of deficiency, except for the following:                      
                                             Reported                                 
          Payor                              on Form:            Amount               
          National Home Life Assurance       1099-R              $1,092               
          Jackson National Life Ins. Co.     1099-R              14,470               
          Jackson National Life Ins. Co.     1099-INT            53                   


               The total distribution by National Home Life Assurance                 
          (National) was $4,426, but respondent contends that only $1,092             
          was taxable, based on information reported to respondent by                 
          National.  The $14,470 payment that petitioner received from                
          Jackson National Life Insurance Company (Jackson) was his one-              
          third share of the accumulation value ($43,410) of an annuity               
          that had been purchased by petitioner's mother, who died in 1990            
          at age 62.  Upon his mother's death petitioner became entitled to           
          this payment as a beneficiary under the annuity contract.                   
          Jackson reported the $14,470 as the gross distribution to                   
          petitioner and did not report what portion of the distribution              
          was taxable.  Petitioner's mother acquired the Jackson annuity in           
          a section 1035 exchange for an annuity that she had acquired                
          through United of Omaha.  This exchange took place on May 5,                
          1986.  Respondent contends that the $53 payment from Jackson is             




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