Michael G. Bunney - Page 1

                                   114 T.C. No. 17                                    

                               UNITED STATES TAX COURT                                

                          MICHAEL G. BUNNEY, Petitioner v.                            
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 20713-97.               Filed April 10, 2000.               

                    Petitioner (H) and his former wife (W) were                       
               divorced in 1992.  H and W were residents of                           
               California, a community property State.  The judgment                  
               dissolving the marriage ordered that H’s IRA’s, which                  
               were funded with contributions that were community                     
               property, be divided equally between H and W.  In 1993,                
               H withdrew $125,000 from his IRA’s and transferred                     
               $111,600 to W.  Held: sec. 408(g), I.R.C., precludes                   
               characterization of W as a 50-percent “distributee” of                 
               H’s IRA’s under sec. 408(d)(1), I.R.C.; accordingly, H,                
               not W, is taxable on the distributions.  Held, further,                
               no portion of the $111,600 paid to W is excludable from                
               H’s income under sec. 408(d)(6), I.R.C.  Held, further,                
               H is liable for the sec. 72(t), I.R.C., additional tax                 
               on the IRA distributions.  Held, further, petitioner                   
               had a reasonable basis for his position, and thus the                  
               accuracy-related penalty for negligence under sec.                     
               6662(a), I.R.C., applies only with respect to the                      
               adjustments conceded by H.                                             

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