Robert C. and Nancy L. Arnold - Page 1

                                   111 T.C. No. 12                                     


                               UNITED STATES TAX COURT                                 


                    ROBERT C. AND NANCY L. ARNOLD, Petitioners v.                      
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                       


               Docket No. 16855-97.               Filed September 28, 1998.            


                    In December 1989, following P's retirement, P began                
               receiving annual distributions from his individual                      
               retirement account (IRA).  At that time, P was 55 years                 
               old.  The distributions were intended to constitute a                   
               series of substantially equal periodic payments within                  
               the purview of sec. 72(t)(2)(A)(iv), I.R.C., so as to                   
               avoid P's having to pay the 10-percent tax pursuant to                  
               sec. 72(t)(1), I.R.C. In November 1993, after five                      
               distributions of $44,000 each had been made, and when P                 
               attained age 59-1/2, P received $6,776 from his IRA. In                 
               the notice of deficiency, R determined that the November                
               1993 distribution impermissibly modified the series of                  
               substantially equal periodic payments within the 5-year                 
               period beginning on the date of the first distribution,                 
               and therefore the 10-percent recapture tax under sec.                   
               72(t)(4), I.R.C., should be imposed on all distributions                
               P received prior to attaining age 59-1/2.  P contends                   
               that the series of substantially equal periodic payments                





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