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the home after 1986 for which petitioner produced what respondent
regarded as adequate documentation.1
On brief, respondent conceded that $9,000 of the $10,000
petitioner paid as a consulting fee is deductible as a
miscellaneous itemized deduction.
OPINION
Exchange of Portion of Annuity Contract
Under section 72(e)(2)(B)(i), amounts received under an
annuity contract prior to the date on which annuity payments are
to begin are to be included in gross income to the extent
allocable to income earned on the annuity contract.
Under section 1035(a)(3), however, gains or losses are not
to be recognized where an annuity contract is exchanged for
another annuity contract. Section 1035(a)(3) provides as
follows:
SEC. 1035. CERTAIN EXCHANGES OF INSURANCE POLICIES.
(a) General Rules.--No gain or loss shall be
recognized on the exchange of--
* * * * * * *
(3) an annuity contract for an annuity
contract.
1 Respondent also allowed a $36,930 adjustment to the selling
price of the home to reflect a real estate sales commission that
petitioner paid.
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