Richard L. and Marjorie A. Freese - Page 4

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          disallow his IRA contribution because he was an involuntary                 
          member of PERS, was a member of PERS for less than 3 months in              
          1990, and when he withdrew his contribution from PERS, he became            
          ineligible for any benefits, and, as such, could not obtain                 
          double tax benefits arising from pension plans in 1990.                     
          Determinations of respondent are presumed correct, and the burden           
          of proof is on petitioners to show otherwise.  Rule 142(a); Welch           
          v. Helvering, 290 U.S. 111, 115 (1933).                                     
               In general, a taxpayer is entitled to deduct amounts                   
          contributed to an IRA.  Sec. 219(a); sec. 1.219-1(a), Income Tax            
          Regs.  The deduction in any taxable year, however, may not exceed           
          the lesser of $2,000 or an amount equal to the compensation                 
          includable in the taxpayer's gross income for such taxable year.            
          Sec. 219(b)(1).  The maximum amount that may be deducted is also            
          limited where the taxpayer or spouse of the taxpayer is an                  
          "active participant" in a retirement plan qualified under section           
          401(a).  Sec. 219(g)(1).  An "active participant" is defined by             
          section 219(g)(5) as an individual:                                         
               (A) who is an active participant in--                                  
                    (i) a plan described in section 401(a) which includes             
               a trust exempt from tax under section 501(a),                          
                    (ii) an annuity plan described in section 403(a),                 
                    (iii) a plan established for its employees by the                 
               United States, by a State or political subdivision thereof,            
               or by an agency or instrumentality of any of the foregoing,            
                    (iv) an annuity contract described in section 403(b),             
               or                                                                     




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