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T.C. Memo. 1995-97 (a taxpayer who was employed for 1 year after
transferring from the Retirement System to the Pension System was
required to include the Transfer Refund in income in the year of
receipt); cf. Adler v. Commissioner, 86 F.3d 378 (4th Cir. 1996),
vacating and remanding T.C. Memo. 1995-148 (where a member of the
Retirement System retired shortly after receiving his Transfer
Refund, such member received the Transfer Refund "on account of"
retirement and was not required to include such amount in income
in the year of receipt).
Petitioners' 1991 Return
On their Federal income tax return for 1991, petitioners
disclosed the receipt of distributions from petitioner's IRA's in
the total amount of $181,481. Of this amount, petitioners
reported $8,762 as the taxable amount.
The Notice of Deficiency
In the notice of deficiency, respondent determined that the
difference between the amount distributed from petitioner's IRA's
(i.e., $90,662.11 + $90,818.53 = $181,480.64) and the amount
reported as taxable ($8,762); i.e., $172,719, was includable in
petitioners' gross income for 1991. As a corollary, respondent
also determined that petitioners were liable for the 15-percent
excise tax imposed by section 4980A.
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