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Petitioners' 1990 Return
On their Federal income tax return (Form 1040) for 1990,
petitioners disclosed the receipt of a distribution from
petitioner's IRA's in the amount of $317,917. Of this amount,
petitioners reported the earnings on petitioner's First American
IRA's, i.e., $7,228, as the taxable amount.4
The Notice of Deficiency
In the notice of deficiency, respondent determined that
$90,000 of the amount distributed in November 1990 from
petitioner's First American IRA's was the return of an excess
contribution to an IRA and, as such, was includable in
petitioners' gross income for 1990 pursuant to sections 408(d)(1)
and 72.
OPINION
Generally, any amount "paid or distributed out of" an IRA is
includable in gross income by the taxpayer in the manner provided
by section 72.5 Sec. 408(d)(1). As relevant herein, section
72(e)(2)(B) provides that amounts received before the annuity
starting date are includable in income to the extent allocable to
4 Petitioners also filed an amended return (Form 1040X) for
1990; however, the entries made therein do not affect our
disposition of the disputed issue.
5 For purposes of sec. 72, all IRA's of an individual are
treated as one contract, and all distributions during a taxable
year are treated as one distribution. Sec. 408(d)(2).
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