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to have satisfied the basic requirements of the exception.
Petitioners have presented no evidence of the terms of the loan
in question. Although we need not, and do not, make a finding to
this effect, we think it probable that the loan to petitioner
qualified for the exception. If the $9,109.93 loan fell under
the exception of section 72(p)(2), it would not have been a
distribution when received, but rather would have simply been a
loan, not taxable to the borrower. Commissioner v. Indianapolis
Power & Light Co., 493 U.S. 203, 207 (1990). In any event,
petitioners have presented no evidence to show that the loan was
in fact includable in income when received. The mere fact that
the loan proceeds were offset against the balance of petitioner's
account before the gross distribution, so that petitioner
received only $16,203.29, does not prevent the $9,109.93 from
being income to petitioner.
Petitioners argue that section 72(e)(4)(A) provides the
relief they seek. However, section 72(e)(4)(A) does not apply in
this case. Section 72(e)(4)(A) applies if an individual
"receives * * * any amount as a loan" under an annuity contract.
Thus, if section 72(e)(4)(A) were to have any application on the
facts of this case, it would have been when petitioners received
the proceeds of the loan in question, not when the gross
distribution was made. Moreover, section 72(e)(4)(A) merely
designates loans under annuity contracts as amounts "not received
as an annuity". Petitioners incorrectly conclude that any amount
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