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excludable from gross income. The amount of a distribution
allocable to the investment in the contract, and thus distributed
tax-free, is the portion of the amount received that bears the
same ratio to the amount received as the investment in the
contract bears to the account balance. Sec. 72(e)(8)(A) and (B).
In determining the taxability of petitioner's IRA
distribution from Loyola, it is necessary to determine the amount
of the distribution allocable to the "investment in the
contract". In dispute in this case is the meaning of the phrase
"aggregate amount of * * * consideration paid for the contract"
found in section 72(e)(6), and whether the phrase encompasses the
excess contribution made by petitioner in the amount of $80,900.
If petitioner's contribution is considered to be an amount paid
in consideration for an IRA and, thus, is an "investment in the
contract", then section 72 would provide a basis for petitioner's
excess contribution and, upon distribution, such amount would be
distributed tax-free. However, if petitioner's excess
contribution is not consideration paid for an IRA and, thus, is
not an "investment in the contract", then section 72 would not
provide a basis in petitioner's excess contribution and, upon
distribution, such amount would be taxed in full.
The parties agree that the plain meaning of the language in
section 72(e)(6), i.e., "amount of * * * consideration paid for
the contract", would include petitioner's excess contribution.
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