Gary Benton Logsdon and Karen Ruth Logsdon - Page 10

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               guaranteed any particular benefit, but rather is                       
               provided with the account balance at retirement.                       
               Section 414(k) provides that where a defined benefit                   
               plan provides a benefit based on the separate account                  
               of a participant, it may [be] treated as a defined                     
               contribution plan.  In essence, section 414(k) creates                 
               a hybrid plan consisting of both a defined benefit and                 
               defined contribution plan.  In so doing, the separate                  
               account of the participant must therefore maintain the                 
               characteristics of a defined contribution plan.  Merely                
               maintaining records to keep track of an individual's                   
               contribution does not satisfy this requirement. [Id. at                
               470-471; emphasis added.]                                              
               The Ninth Circuit went on to observe that, because Malbon's            
          benefits were determined on the basis of average salary and years           
          of service and because the return of his contributions included             
          no increment for earnings thereon, there was no benefit based               
          upon the balance of the separate account of the taxpayer as                 
          required by section 414(k).  Without such a benefit, the court              
          concluded that the CSRS did not have a defined contribution                 
          component, and Malbon's lump-sum credit was taxable in the year             
          received.  Accord Montgomery v. United States, 18 F.3d 500 (7th             
          Cir. 1994); Green v. Commissioner, T.C. Memo. 1994-340.                     
               Although petitioners concede that "the clear language of the           
          statutes * * * must control the outcome of this case," they also            
          assert that the legislative history and other nonstatutory                  
          evidence requires a different conclusion.  The Ninth Circuit in             
          Malbon v. United States, supra at 471, fn. 11, considered                   
          sections 72 and 414 to be unambiguous and refused to rely upon              
          legislative history.  Consequently, in this framework,                      
          petitioners' argument misses the mark.                                      

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