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payments. In a subsequent garnishment proceeding, on or about
March 18, 1992, Kathleen J. Vorwald was awarded a judgment in the
amount of $8,483.25 against Deer Valley. Pursuant to this
judgment, Deer Valley was ordered to transfer $8,483.25 from the
IRA to Kathleen J. Vorwald, which transfer apparently took place
during 1992.
Petitioner did not become aware that his former spouse
garnished his IRA until he was so notified by respondent during
the course of the examination that eventually led to this
proceeding.
In the notice of deficiency, respondent determined that the
amount paid to Kathleen J. Vorwald by Deer Valley from the IRA
pursuant to the garnishment proceeding constitutes a distribution
to petitioner that is includable in his 1992 income. Respondent
further determined that the distribution is subject to the
additional tax imposed by section 72(t).
Discussion
We first consider whether under the circumstances present in
this case, the transfer of the funds from the IRA to petitioner's
former spouse is tantamount to a distribution from the IRA to
petitioner. For the following reasons, we find that it is.
Because the transfer of funds from the IRA to petitioner's
former spouse at least partially discharged a legal obligation he
owed to her, the transfer to her is the equivalent of receipt by
him. Old Colony Trust Co. v. Commissioner, 279 U.S. 716, 729
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