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transferring from the Retirement System to the Pension System,
petitioner's monthly annuity is less than the monthly annuity
that he would have received if he had not transferred to the
Pension System but had retired under the Retirement System.6
Petitioner received a Form W-2P from the Maryland State
Retirement Agency for 1990. The Form W-2P reported the
distribution of the Transfer Refund in the amount of $216,616.26.
The form also reported that the taxable portion of the Transfer
Refund was $186,758.54.7
On their income tax return for 1990, petitioners reported as
income the taxable portion of the Transfer Refund, as set forth
on the Form W-2P, and elected 5-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
$186,759; i.e., the taxable portion of the Transfer Refund as set
forth on the Form W-2P. Petitioners then computed the tax on
6 Petitioner estimated that his monthly annuity under the
Pension System is approximately one-half of what it would have
been if he had retired under the Retirement System. However, as
previously indicated, petitioner would not have received the
Transfer Refund if he had retired under the Retirement System.
The inducement to accept a less generous monthly annuity under
the Pension System was the Transfer Refund.
7 The discrepancy between the taxable portion of the
Transfer Refund as reported on the Form W-2P, i.e., $186,758.54,
and the taxable portion of the Transfer Refund as stipulated by
the parties, i.e., $184,464.95, is unexplained in the record. We
will give effect to the parties' stipulation.
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