Gary Benton Logsdon and Karen Ruth Logsdon - Page 7

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               The parties agree that Mr. Logsdon elected under 5 U.S.C.              
          section 8343a to receive an alternative annuity consisting of a             
          lump-sum credit and a reduced annuity.  The parties also agree              
          that Mr. Logsdon's contributions to the CSRS should be recovered            
          tax free.  Consequently, this case does not involve the question            
          of whether Mr. Logsdon can recover his contributions tax free but           
          rather when that recovery should occur.                                     
               While petitioners acknowledge that the CSRS plan, in which             
          Mr. Logsdon participates, is a defined benefit plan, they argue             
          that Mr. Logsdon's contributions were made to a separate account            
          in the CSRS, thus satisfying the separate-account requirement of            
          section 414(k).  Thus, petitioners assert that his receipt of the           
          lump-sum credit in 1991 was simply a tax-free return of his                 
          contributions.  Respondent, however, contends that case law is              
          settled that the lump-sum credit must be reported as taxable                
          income in the year received pursuant to section 72(e)(2).                   
               Petitioners concede that for a separate account to be                  
          recognized as a defined contribution plan for purposes of section           
          414(k), it must have some of the characteristics of a defined               
          contribution plan.  Section 414(i) defines a defined contribution           

                    (2) for purposes of [section] 72(d) * * * be                      
               treated as consisting of a defined contribution plan to                
               the extent benefits are based on the separate account                  
               of a participant and as a defined benefit plan with                    
               respect to the remaining portion of benefits under the                 
               plan * * *                                                             

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