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Transfer Refund on account of transferring from the Retirement
System to the Pension System, petitioner's monthly annuity will
be less than the monthly annuity she would have received if she
had not transferred to the Pension System but had retired under
the Retirement System.6
C. Petitioner's Federal Income Tax Return
Petitioner did not attempt to roll over the taxable portion
of the Transfer Refund. See sec. 402(a)(5). Rather, on her
Federal income tax return (Form 1040) for 1991, petitioner
reported such portion of the Transfer Refund as ordinary income.7
Further, in computing her income tax liability for 1991,
petitioner did not attempt to income average pursuant to section
402(e)(1); rather, she computed such liability by reference to
the tax rate schedule applicable to her filing status.
In the notice of deficiency, respondent characterized the
taxable portion of petitioner's reported retirement distributions
6 It should be recalled that petitioner remained employed
by the State of Maryland at the time that this case was submitted
to the Court in July 1996.
7 Petitioner also reported on her return another
retirement distribution in the gross (and taxable) amount of
$158. Accordingly, petitioner reported total retirement
distributions in the gross amount of $348,641 (i.e., $348,483 +
$158) and in the taxable amount of $327,814 (i.e., $327,656 +
$158). The parties have stipulated that the $158 distribution,
as well as the Transfer Refund (in the amount of $348,483), was
received from the Retirement System. However, the record does
not disclose the relationship of the $158 distribution to the
Transfer Refund. See infra note 8 and the accompanying text.
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