Joe M. and Patricia M. Brown - Page 19

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          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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