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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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Last modified: May 25, 2011