108 T.C. No. 5
UNITED STATES TAX COURT
GEORGE AND ELAM CAMPBELL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12931-95. Filed February 18, 1997.
P was a State employee. In October 1989, P
elected to transfer from the State Retirement System to
the State Pension System effective November 1989. As a
consequence, P received a Transfer Refund in 1989
consisting principally of previously taxed
contributions and taxable earnings. Shortly
thereafter, P deposited approximately one-half of the
taxable portion into an IRA with Loyola.
P included the entire taxable portion of the
Transfer Refund in income on an amended tax return for
1989. See Dorsey v. Commissioner, T.C. Memo. 1995-97.
In April 1991, P closed his Loyola IRA. On a 1991
tax return, P included in income a portion of the
earnings generated by the IRA but not the balance. P
contends that sec. 72(e)(6) provides P with a basis in
his IRA equal to the amount rolled over from his
Transfer Refund into the IRA. R contends that such an
application of sec. 72(e)(6) is contrary to legislative
intent.
Held, Sec. 72(e)(6) provides P with a basis in his
entire Loyola IRA contribution, the genesis of which
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