Jeffery Allen Robinson - Page 7

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          was precluded from rolling over the distribution to an IRA.5                
          Another reason advanced by petitioner is that, because he was               
          covered by a qualified plan at K-Mart, this also precluded his              
          entitlement to a rollover of the distribution from his former               
          employer, the convention center.  Petitioner appears to further             
          contend that, by virtue of his being a participant in the K-Mart            
          plan, such participation constituted a rollover of the convention           
          center distribution without an actual transfer of the                       
          distribution to the K-Mart plan.                                            
          Section 402(a)(1) provides that "the amount actually                        
          distributed to any distributee by any employees' trust described            
          in section 401(a) * * * shall be taxable to him, in the year in             
          which so distributed, under section 72 (relating to annuities)."            
          However, an exception to this general rule is found in section              
          402(a)(5)(A), which provides:                                               



          5     Petitioner apparently is confused by the fact that, sec.              
          219 allows as a deduction for a contribution to an IRA for any              
          taxable year an amount not to exceed the lesser of $2,000 or the            
          amount of the compensation includable in the individual's gross             
          income for such taxable year.  Sec. 219(d)(2) provides that a               
          qualifying rollover to an IRA (including, but not limited to,               
          those described in sec. 402(a)(5)) is not deductible as a                   
          "qualified retirement contribution" under sec. 219(a).  Moreover,           
          a qualifying rollover to an IRA is not included in the                      
          calculation of an "excess contribution" to which an excise tax              
          applies under sec. 4973(a).  Sec. 4973(b)(1)(A).  Consequently, a           
          qualified rollover is not includable in gross income (as                    
          explained hereafter in the main text), nor deductible against               
          gross income, nor subjected to an excise tax in the year of the             
          rollover (i.e., a "wash" transaction for tax purposes).                     




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