Gary Benton Logsdon and Karen Ruth Logsdon - Page 13

                                       - 13 -                                         
          on a prorated basis pursuant to section 72(b).8  We need not                
          address whether any portion of Mr. Logsdon's lump-sum credit is             
          includable pursuant to section 72(b), for petitioners have not              
          established that Mr. Logsdon made a deemed deposit or redeposit.            
          In any event, a similar argument as to a deemed deposit was                 
          rejected by the Ninth Circuit in Malbon v. United States, 43 F.3d           
          at 471-472, concluding that the economic substance of the                   
          arrangement required that the deemed deposit be taxed as part of            
          the lump-sum payment in accordance with section 72(e).                      
          III. Section 6662(a)--Accuracy-Related Penalty                              
               Respondent determined that petitioners are liable for an               
          accuracy-related penalty of $4,870 pursuant to section 6662(a)              
          for 1991.  Section 6662 imposes a 20-percent penalty on any                 
          portion of any underpayment that is attributable to any                     
          substantial understatement of income tax.  Sec. 6662(a)(2),                 

               8Sec. 72(b) provides in pertinent part:                                
               SEC. 72(b).  Exclusion Ratio.--                                        
                    (1) In general.-- Gross income does not include                   
               that part of any amount received as an annuity under an                
               annuity, endowment, or life insurance contract which                   
               bears the same ratio to such amount as the investment                  
               in the contract (as of the annuity starting date) bears                
               to the expected return under the contract (as of such                  
                    (2) Exclusion limited to investment.-- The portion                
               of any amount received as an annuity which is excluded                 
               from gross income under paragraph (1) shall not exceed                 
               the unrecovered investment in the contract immediately                 
               before the receipt of such amount.                                     

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011