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the present value of one-half of petitioner's "accrued benefit"
under the pension plan exceeded $100,000.
Section 402(a) provides that, with exceptions not here
relevant, distributions from a qualified plan are taxable to the
distributee, in the taxable year of the distributee in which
distribution occurs, pursuant to section 72. Section 72(p)(1)(A)
provides the general rule that loans from a qualified employer
plan to plan participants or beneficiaries are treated as taxable
distributions. Section 72(p)(2)(A), however, provides an
exception to the general rule for any loan to the extent that
such loan (when added to the outstanding balance of all other
loans from the plan) does not exceed the lesser of: (1) $50,000
(reduced under conditions not here relevant), or (2) the greater
of one-half of the present value of participant's "nonforfeitable
accrued benefit" under the plan or $10,000.9 The exception
provided in section 72(p)(2)(A) does not apply unless: (1) The
loan, by its terms, is required to be repaid within 5 years, sec.
72(p)(2)(B), and (2) "substantially level amortization of such
9 The parties stipulated that, at all relevant times, one-half
of the present value of petitioner's "accrued benefit" exceeded
$100,000. We, however, conclude that the stipulation is not
helpful as sec. 72(p)(2)(A)(2) takes into account only the
participant's nonforfeitable accrued benefit. We note that, in
any case, the sec. 72(p)(2)(A) exception is limited to loans
(when added to the outstanding balance of all other loans from
the plan) that do not exceed $50,000. The lesser of (1) $50,000
or (2) the greater of the two specified amounts, sec.
72(p)(2)(A), is an amount equal to $50,000 or less. Accordingly,
loans that exceed $50,000 do not qualify for the sec. 72(p)(2)(A)
exception.
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