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reported adjusted gross income of $69,313.51 for 1997. Among
other itemized deductions not at issue herein, petitioners
claimed a deduction for a casualty or theft loss of $300,000 in
connection with the loss, at the time of petitioner's dismissal
from Berkeley, of his employer-sponsored term life insurance
policy having a face value of $300,000. Thus, petitioners
reported a zero tax liability for 1997, a withholding credit of
$14,019.67, and an overpayment of $14,019.67.
In the notice of deficiency, respondent determined that
petitioners failed to include in income $45,955 in taxable
retirement distributions from Berkeley and that the $11,281
distribution from petitioner's Bank of America IRA was taxable.
Respondent determined further that petitioners were not entitled
to a deduction for the $300,000 casualty or theft loss claimed on
their return and that petitioners were liable for the accuracy-
related penalty under section 6662(a) for a substantial
understatement in tax or for negligence or disregard of rules or
regulations in the amount of $3,211.20.
The first issue is whether petitioners failed to include in
income $45,955 in taxable retirement plan distributions for the
year at issue identified above as the U. of California Benefits
Program. Beginning in February 1997, petitioner began receiving
monthly pension checks of $5,579.83 from the University of
California totaling $61,378.13 for the year (the pension
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