- 19 -
of this issue turns on whether the Transfer Refund constitutes a
"partial distribution", as defined by section 402(a)(5)(E)(v).16
A "partial distribution" is defined as "any distribution to
an employee of all or any portion of the balance to the credit of
such employee in a qualified trust; except that such term shall
not include any distribution which is a qualified total
distribution." Sec. 402(a)(5)(E)(v). Further, a partial
distribution must be "payable as provided in clause (i), (iii),
or (iv) of subsection (e)(4)(A) (without regard to the second
sentence thereof)". Sec. 402(a)(5)(D)(i)(I).17
As relevant herein, section 402(e)(4)(A) provides that a
distribution must be made either "(i) on account of the
16 The Transfer Refund would also qualify for tax-free
rollover treatment if it were a "qualified total distribution",
as defined by sec. 402(a)(5)(E)(i). In this case, petitioners do
not contend that the Transfer Refund was a qualified total
distribution. In any event, the Transfer Refund was not a
qualified total distribution. See Wittstadt v. Commissioner,
T.C. Memo. 1995-492, Humberson v. Commissioner, T.C. Memo. 1995-
470; Pumphrey v. Commissioner, T.C. Memo 1995-469; Dorsey v.
Commissioner, T.C. Memo. 1995-97, affd. without published opinion
91 F.3d 129 (4th Cir. 1996); Hylton v. Commissioner, T.C. Memo.
1995-27.
17 In order to qualify as a "partial distribution", sec.
402(a)(5)(D)(i)(I) also requires that the distribution "is of an
amount equal to at least 50 percent of the balance to the credit
of the employee in a qualified trust". This additional
requirement was not raised in the notice of deficiency as a
reason for the adjustment to petitioners' income for 1989, see
supra note 11, nor was it raised by respondent in either her
trial memorandum or at trial in her counsel's opening statement.
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