Robert C. and Nancy L. Arnold - Page 4

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          petitioner retained EMJAY Corp. (EMJAY), an actuary, to calculate            
          the needed series of substantially equal periodic payments from his          
          IRA (pursuant to section 72(t)(2)(A)(iv)) to avoid the imposition            
          of the 10-percent tax on premature distributions under section               
          72(t)(1).  In a December 5, 1989, letter, an executive vice                  
          president of EMJAY advised petitioner of the different calculation           
          methods petitioner could employ.1 Petitioner elected the                     
          calculation method that allowed him to receive annual distributions          
          of approximately $44,000.                                                    
               In December 1989 when petitioner was 55 years old,2 he began            
          receiving annual distributions from his IRA.  The distributions              
          from petitioner's IRA were as follows:                                       
                         December 1989        $44,000                                  
                         January 1990         44,000                                   
                         January 1991         44,000                                   
                         January 1992         44,000                                   
                         January 1993         44,000                                   
                         November 1993        6,776                                    
          Petitioner received the $6,776 distribution in November 1993 to              
          compensate for the lack of payment by Sowhite Chemical after it              
          filed for bankruptcy.  In November 1993, petitioner was over the             
          age of 59-1/2.                                                               


               1    The three permissible methods for calculating the                  
          series of substantially equal periodic payments under sec.                   
          72(t)(2)(A)(iv) are provided in Notice 89-25, Q&A-12, 1989-1 C.B.            
          662, 666.  The parties agree that the method selected by                     
          petitioner satisfies the requirements of Notice 89-25.                       
               2    Petitioner was born on Mar. 3, 1934.                               




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