Mark J. Vorwald - Page 5

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          because there is no evidence in the record that petitioner made             
          nondeductible contributions to the IRA, we must assume that his             
          tax basis in the IRA was zero.  Sec. 1.408-4(a)(2), Income Tax              
          Regs.  It follows that he can be given no credit for any                    
          investment in the IRA, within the meaning of section 72(e)(6) and           
          72(e)(3)(A)(ii).  We also note that petitioner makes no argument,           
          and nothing in the record suggests, that the provisions of                  
          section 408(d)(6) and section 1.408-4(g), Income Tax Regs.,                 
          relating to transfers between spouses or former spouses, have               
          application in this case.  Consequently, the entire amount of the           
          distribution is allocated to, and must be included in,                      
          petitioner's income.  Sec. 72(e)(3)(A); sec. 1.408-4(a)(1),                 
          Income Tax Regs.  Accordingly, respondent's adjustment increasing           
          petitioner's income by the IRA distribution is sustained.                   
               The IRA is a qualified retirement plan within the meaning of           
          section 72(t).  Sec. 4974(c)(4).  Section 72(t)(1) imposes an               
          additional tax equal to 10 percent of the portion of any                    
          distribution from a qualified retirement plan that is includable            
          in the taxpayer's gross income.  Several exceptions to the                  
          imposition of the additional tax are enumerated in section                  
          72(t)(2).  Petitioner has presented neither evidence nor argument           
          in support of the application of any of the exceptions, and we              
          are satisfied that none apply.  Accordingly, the additional tax             
          imposed by section 72(t) is applicable to the distribution, and             
          respondent's determination in this regard is sustained.                     

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