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Therefore, he in effect repaid the loan out of his pension plan
account.
If the loan proceeds were taxed when first received by
petitioner, taxing them at the time of the gross distribution
would lead to double taxation of the same funds, a result
generally to be avoided. See Campbell v. Commissioner, 108 T.C.
54, 67-68 (1997). However, petitioners are required to show that
the loan proceeds were taxed when first received in order to
avoid taxation at the time they were offset against the gross
distribution, and they have not done so. Petitioners make no
allegation or argument that the loan proceeds were taxed when
first received, and the available evidence suggests otherwise.
First of all, petitioner received a statement from the plan with
respect to the gross distribution that indicated that the
$9,109.93 loan proceeds would be included in the gross
distribution for purposes of taxable income. Thus, the plan
administrators believed, and so advised petitioner, that the loan
proceeds were includable in income.
Moreover, it appears that the loan to petitioner was not
income when received because it was a loan of $10,000 or less.
In general a loan from a qualified plan to a plan participant is
treated as a distribution from the plan under section 72(p)(1),
and therefore included in income under section 72. See sec.
402(a). However, section 72(p)(2)(A) provides an exception to
the general rule for certain loans, and petitioner's loan appears
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