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which payment is "in the nature of a refund of the consideration
paid for the contract," is taxable only to the extent it exceeds
the investment in the contract (determined under section
72(e)(6)). Sec. 72(e)(5)(A), (E). An amount is considered to be
"in the nature of a refund" where it is payable to a beneficiary
after the death of the annuitant under a contract for a life
annuity, with a minimum number of payments certain, or a minimum
amount which must be paid in any case. Sec. 1.72-11(c)(1),
Income Tax Regs.
The annuity payment that petitioner received upon his
mother's death is thus "in the nature of a refund of the
consideration paid for the contract", and is taxable to the
extent it exceeds the investment in the contract. The investment
in the contract is the aggregate amount of premiums or other
consideration paid for the contract less any amounts previously
received under the contract which were excludable from gross
income. Sec. 72(e)(6). Petitioner has offered no evidence
regarding the investment in the contract. He has therefore
failed to carry his burden to show that any portion of the
payment he received should be excluded from his gross income.
Commissioner v. Glenshaw Glass Co., supra at 429-431.
Accordingly, we sustain respondent's determination that the full
$14,470 payment is includable in petitioner's gross income.
Interest Income and Retirement Distribution
Petitioner admits receiving a $53 payment from Jackson and a
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Last modified: May 25, 2011