Harold E. Emmons and Anna Mae Emmons - Page 7

                                        - 7 -                                         
               Petitioners' Federal Income Tax Return                                 
               On their Federal income tax return (Form 1040) for 1991,               
          petitioners reported the taxable portion of the Transfer Refund             
          and the taxable portion of petitioner's annuity payments as                 
          ordinary income.  In the notice of deficiency, respondent                   
          characterized petitioner's retirement distributions over $150,000           
          as an excess distribution from a qualified retirement plan.6                
          Respondent then determined that petitioners were liable for the             
          excise tax under section 4980A.7                                            
          Discussion                                                                  
               The only issue for decision is whether petitioners are                 
          liable for the 15-percent excise tax for an excess retirement               
          distribution under section 4980A.  The resolution of this issue             
          turns on whether the Transfer Refund was paid from a defined                
          benefit plan, as respondent contends, or from a defined                     
          contribution component of a defined benefit plan described in               
          section 414(k), as petitioners contend.                                     

          6 The Forms 1099-R (Total Distributions From Profit-Sharing                 
          Plans, Individual Retirement Arrangements, Insurance Contracts,             
          Etc.) issued by the Maryland State Retirement Agency indicate               
          that the taxable portion of the Transfer Refund was $378,585.               
          Petitioners reported the taxable portion of the Transfer Refund             
          on their 1991 income tax return consistent with the Forms 1099-R.           
          Likewise, respondent determined the amount of the excess                    
          distribution based on the taxable portion reported on the Forms             
          1099-R.  However, the parties stipulated that the taxable portion           
          of the Transfer Refund was $378,053.86.  The parties' stipulation           
          appears to account for an error on one of the Forms 1099-R.  In             
          any event, we give effect to the stipulation.                               
          7 See supra note 3 regarding respondent's concession as to                  
          petitioner Harold E. Emmons.                                                



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