- 18 -
Wayne further contends that the funds received from the IRA were
loans. Wayne did not address this issue at trial or on brief.8
Under section 408(d)(1), "any amount paid or distributed out
of an individual retirement plan shall be included in gross
income by the payee or distributee * * * in the manner provided
under section 72." See also Campbell v. Commissioner, 108 T.C.
54 (1997). Generally, any amount distributed from an IRA is
includable in the gross income of the recipient in the year in
which the distribution is received. Sec. 408(d)(1); sec. 1.408-
4(a)(1), Income Tax Regs. Because there is no evidence in the
record that Wayne made nondeductible contributions to his IRA, we
find that his tax basis in the IRA was zero. Sec. 1.408-4(a)(2),
Income Tax Regs.; see also sec. 72(e)(2)(B). Therefore, he is
afforded no credit for any investment in the IRA within the
meaning of section 72(e)(3)(A) and (6). See also Vorwald v.
Commissioner, T.C. Memo. 1997-15. The distributions are thereby
allocated to, and included in, Wayne's gross income as follows:
$9,000 for 1993 and $9,307 for 1994.
8 Wayne appears to have abandoned his untenable position
that the funds were received in the form of loans. Unlike a loan
from a qualified plan, a loan from an IRA to its owner is always
a prohibited transaction (there is no exception for loans from an
IRA to its beneficiary). Sec. 4975(d); Employee Retirement
Income Security Act of 1974, Pub. L. 93-406, sec. 408(d), 88
Stat. 829, 885. If such a loan was made, the IRA would lose its
exemption and all assets would be deemed distributed. Sec.
408(e)(1) and (2).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011