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argue that section 402(a), which governs the taxability of
beneficiaries of exempt trusts, provides that taxpayers should
not be taxed until they receive distributions from such trusts.
Petitioners cite section 1.402(a)-1(a)(1)(i), Income Tax Regs.,
which provides:
Section 402 relates to the taxation of the beneficiary
of an employees' trust. If an employer makes a
contribution for the benefit of an employee to a trust
described in section 401(a) * * * the employee is not
required to include such contribution in his income
except for the year * * * in which such contribution is
distributed or made available to him. * * * [Emphasis
added.]
Since petitioner was not an employee of Allstate, the above
regulation does not apply to her.
Respondent argues that section 83 provides the support for
taxing petitioner. Section 83 reads, in part:
SEC. 83. PROPERTY TRANSFERRED IN CONNECTION WITH
PERFORMANCE OF SERVICES.
(a) General Rule.--If, in connection with the
performance of services, property is transferred to any
person other than the person for whom such services are
performed, the excess of--
(1) the fair market value of such
property (determined without regard to any
restriction other than a restriction which by
its terms will never lapse) at the first time
the rights of the person having the
beneficial interest in such property are
transferable or are not subject to a
substantial risk of forfeiture, whichever
occurs earlier, over
(2) the amount (if any) paid for such
property,
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