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to compute his benefits) were 1983, 1984, and 1985 in the amounts
of $53,661, $55,807, and $57,759, respectively.
Upon his retirement, petitioner elected to receive the
survivor’s annuity for his spouse and a lump-sum payment under
the annuity option. Taking into consideration the survivor’s
annuity option, the gross monthly rate of the annuity benefit was
$1,925. Taking into consideration both the survivor’s annuity
and the lump-sum option, the gross monthly rate of the annuity
benefit was $1,796.
During 1987, petitioner received CSRS payments that totaled
$71,835.03, $52,227.53 of which was paid as a lump-sum payment
and $19,607.50 of which was paid as an annuity payment.
Discussion
Respondent determined that, based on the exclusion ratio
calculated pursuant to section 72(b), petitioners were required
to include a portion of the lump-sum payment from petitioner’s
CSRS in their gross income in 1987. Petitioners argue that such
inclusion would result in double taxation of petitioner’s
investment in the CSRS and that the lump-sum payment should be
treated as a separate account for purposes of section 72 because
the CSRS plan in which petitioner participated qualifies, in
part, as a defined contribution plan.
The amount withheld for CSRS from an employee’s salary is
taxable in the year in which the deduction is made. Malbon v.
United States, 43 F.3d 466, 467 (9th Cir. 1994); Hogan v. United
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