- 6 -
CSRS tax-free. This recovery, however, will be spread over the
life of the retirement annuity pursuant to the section 72(b)
exclusion ratio.
Petitioner also contends that the lump-sum payment should
not be included in gross income because it constitutes a
distribution from a defined contribution plan. Section 72(d)
provides that employee contributions under a defined contribution
plan may be treated as a separate contract. The result of such
treatment would be that the lump-sum payment received by
petitioner would be viewed in isolation from the annuity
payments, and, thus, the lump-sum payment would be a simple
return of his investment and nontaxable. See sec. 72(e)(5)(E);
Montgomery v. United States, supra at 501.
We have considered petitioners’ argument and have concluded
that the lump-sum payment does not fall within the definition of
a defined contribution plan. The cited decisions of the Fifth,
Seventh, and Ninth Circuit Courts of Appeals and the Court of
Federal Claims have used different reasoning to reach this same
result, and it is unnecessary at this time to resolve the
differences in approaches of the appellate decisions. See Green
v. Commissioner, T.C. Memo. 1994-340.
To reflect the foregoing and concessions of the parties,
Decision will be entered
under Rule 155.
Page: Previous 1 2 3 4 5 6
Last modified: May 25, 2011