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Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
After settlement of some issues, the primary issue for
decision is whether direct transfer of a portion of funds
invested in an annuity contract into another annuity contract
qualifies as a nontaxable exchange under section 1035.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
When the petition was filed, petitioner resided in
Minneapolis, Minnesota.
Exchange of Portion of Annuity Contract
In 1992, petitioner purchased from Fortis Benefits Insurance
Co. (Fortis) an annuity contract for a total purchase price of
$195,643 (Fortis annuity contract). Payments under the Fortis
annuity contract would not begin until February 4, 2029.
In 1994, petitioner requested Fortis to withdraw $119,000
from the Fortis annuity contract and to issue a check in favor
of, and to transfer the funds directly to, Equitable Life
Insurance Co. of Iowa (Equitable) for purchase of a new annuity
contract from Equitable (Equitable annuity contract). Pursuant
to petitioner's request, Fortis debited petitioner's annuity
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Last modified: May 25, 2011