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the close of the calendar year in which the taxable year begins.
See sec. 408(d)(2).
Generally, a taxpayer is allowed a basis in IRA
contributions to the extent the contributions are considered an
“investment in the contract”. Secs. 408(d)(2), 72. Section
72(e)(6) defines generally “investment in the contract” as being
the consideration paid for the contract less amounts previously
received under the contract that are excludable from gross
income. Thus, nondeductible contributions a taxpayer has made to
a retirement plan may be excluded from gross income when such
distributions are made. See Campbell v. Commissioner, 108 T.C.
54 (1997). In addition, Form 8606 must be attached to the return
for reporting the receipt of IRA distributions if the taxpayer
made any nondeductible IRA contributions before or during the
taxable year.
The derivation and computation of the amounts reported on
the Forms 1099-R by Fidelity are not in dispute. The only
question is whether these amounts are includable in petitioner's
gross income.
At trial, petitioner testified that he did not remember how
he calculated the excluded portion of his IRA or whether any
portion of the IRA distributions was from nondeductible IRA
contributions. In addition, petitioner failed to produce any tax
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Last modified: May 25, 2011