Gary Benton Logsdon and Karen Ruth Logsdon - Page 9

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          taxable,7 the court found that the individual accounting for                
          Guilzon's contributions satisfied the separate-account                      
          requirement of section 414(k).  Id.                                         
               The Court of Appeals for the Ninth Circuit addressed                   
          petitioners' argument in Malbon v. United States, 43 F.3d 466               
          (9th Cir. 1994), the controlling decision in the Court of Appeals           
          to which an appeal in this case would lie.  See Golsen v.                   
          Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.             
          1971).  In Malbon v. United States, supra, the taxpayer retired             
          under the CSRS in 1987 and elected the alternative annuity under            
          5 U.S.C. sections 8342(a) and 8343a, receiving a lump-sum credit            
          and a reduced annuity.  Malbon also contended that his                      
          contributions were placed into a separate account in the CSRS,              
          constituting a separate account pursuant to section 414(k) and,             
          consequently, were not taxable.  The Ninth Circuit rejected                 
          Malbon's argument and the reasoning of the Fifth Circuit in                 
          Guilzon.  Malbon v. United States, supra at 469-470.  Instead,              
          the court reasoned that                                                     
               A defined benefit plan provides a benefit regardless of                
               the contribution amount or the success of the                          
               investments.  The amount of the benefit is guaranteed                  
               based on years of service and salary at time of                        
               retirement.  A defined contribution plan, however,                     
               provides a benefit dependent on the investment                         
               performance of the contributions.  The employee is not                 

               7The Court of Appeals for the Fifth Circuit held that                  
          Guilzon's lump-sum credit was taxable because the CSRS did not              
          provide a benefit derived from employer contributions as required           
          by sec. 414(k).                                                             

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