Jerry Silver - Page 3

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          distribution did petitioner knowingly contribute, either directly           
          or indirectly, to the Plan.  Petitioner deposited the check                 
          representing the distribution into his personal bank account on             
          July 3, 1989.  On July 14, 1989, petitioner mailed a check drawn            
          against his personal account to Goldfinger in the amount of                 
          $3,474.71.  Goldfinger was the payee of this check, and he                  
          subsequently deposited it into his personal bank account.  On his           
          return for 1989, petitioner reported the $6,749 as a nontaxable             
          IRA distribution.  Respondent determined that the entire amount             
          of the distribution constituted taxable income to petitioner.               
               As a general rule, respondent’s determinations are presumed            
          correct, and petitioner has the burden of proving otherwise.                
          Rule 142(a).                                                                
               There is no dispute as to whether petitioner received the              
          $6,749 distribution.  Petitioner contends, however, that the                
          $3,474.71 check constitutes his investment in the Plan.                     
          Respondent, on the other hand, contends that petitioner sent the            
          check to Goldfinger pursuant to an agreement wholly unrelated to            
          the Plan, and that, under section 72(e)(6), petitioner has no               
          investment in the Plan.  We agree with respondent.                          
               Section 402 provides that amounts actually distributed from            
          a qualified plan are taxable to the distributee under section 72            
          in the year of distribution.  Sec. 402(a)(1).  The Plan in the              
          instant case is a qualified plan.  Sec. 401(a).  Section 72                 

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