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set forth on the Form 1099-R, and elected 10-year forward
averaging under section 402(e)(1). In this regard, petitioners
attached Form 4972 (Tax on Lump-Sum Distributions) to their
income tax return and reported on said form ordinary income in
the amount of $138,229, i.e., the taxable portion of the Transfer
Refund as set forth on the Form 1099-R. Petitioners then
computed the tax on said amount and included such tax as part of
their total income tax liability on page 2 of their Form 1040.
Respondent's Notice of Deficiency
In the notice of deficiency, respondent determined that
petitioners do not qualify for 10-year forward averaging.
Accordingly, respondent treated the taxable portion of the
Transfer Refund, which she determined to be $136,094.23, as
subject to the regular income tax.9 Respondent also determined
that petitioners are liable for the 10-percent additional tax
imposed by section 72(t) based on the distribution in the
foregoing amount.
OPINION
Respondent contends that the Transfer Refund does not
qualify for forward averaging because it does not constitute a
"lump sum distribution" within the meaning of section
9 The discrepancy between the taxable portion of the
Transfer Refund as determined in the notice of deficiency, i.e.,
$136,094.23, and the taxable portion as stipulated by the parties
of that part of the Transfer Refund that was paid to petitioner
in March 1990, i.e., $136,681.18, is unexplained in the record.
We accept the parties' stipulation.
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