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Discussion
We must decide whether the Decree is a qualified domestic
relations order (QDRO) within the meaning of section 414(p), thus
relieving petitioner of liability for tax pursuant to section
402(a)(9) on the $156,099.46 portion of the lump-sum distribution
used to satisfy his mortgage and pay his ex-wife, and the $17,676
additional tax under section 72(t). For the reasons which
follow, we hold that the Decree does not constitute a QDRO.
Ordinarily, any funds distributed from an exempt employees'
trust (under a tax qualified employees' plan) are taxable to the
plan participant or beneficiary who is entitled to receive the
distribution under the plan. Darby v. Commissioner, 97 T.C. 51,
58 (1991). However, section 402(a)(9) (now section 402(e)(1)(A))
states an exception to this general rule, providing that an
alternate payee (who is the spouse or former spouse of the plan
participant) shall be treated as the distributee of any
distribution or payment made to such payee under a QDRO.
Accordingly, the tax liability for the distribution from the
Fluor Daniel retirement accounts will be allocated either to
petitioner or to Mrs. Burton depending upon whether the Decree
meets the statutory definition of a QDRO.
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