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We therefore find that under section 72, as modified by
section 408(d)(1) and (2), part of petitioner's retirement
account distributions represents a nontaxable return to him of
his investment in the contract and part represents accrued
income, which petitioner agrees is taxable to him.
Return of Contributions
Before we apply section 72 as modified by section 408(d)(1)
and (2), however, we must consider the effect of section
408(d)(4) and (5). Under these provisions, nondeductible amounts
contributed to an IRA for a taxable year, and later withdrawn,
are not treated as taxable distributions.6 Contributions
withdrawn by the individual by April 15 of the year following the
taxable year, for which no deduction is allowed with respect to
the contribution, are not taxable upon distribution. Sec.
408(d)(4); Childs v. Commissioner, T.C. Memo. 1996-267.
Petitioner was employed by the Tribe in Indian fishing-
rights-related activity. Payments to petitioner for such Indian
fishing-rights-related services were not includable in his gross
income. Sec. 7873. The contributions made on his behalf to
Guardian by the Tribe were made due to his Indian fishing-rights-
related services and are considered as "compensation" under
6A contribution distributed before the due date of the
return must be accompanied by the amount of net income
attributable to such contribution which net income is includable
in gross income. Sec. 408(d)(4).
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