Michael G. Bunney - Page 4

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          community property.  During 1993, petitioner withdrew $125,000              
          from his IRA’s and deposited the proceeds in his money market               
          savings account.  During the same year, petitioner transferred              
          $111,600 to his former spouse in a transaction in which he                  
          acquired her interest in the family residence.  Petitioner                  
          reported only the remaining $13,400 of the distributions on his             
          1993 Federal income tax returns.                                            
          Issue 1.  Taxability of IRA Distributions                                   
               A.   Allocation of Tax Liability                                       
               We pass for the first time on the question of whether one-             
          half of community funds contributed to an IRA account established           
          by an IRA participant are, upon distribution, taxable to the                
          participant’s former spouse by virtue of the fact that the former           
          spouse has a 50-percent ownership interest in the IRA under                 
          applicable community property law.  Section 408(g), as discussed            
          below, provides explicitly that section 408 (the statutory                  
          provision governing IRA requirements and the taxability of IRA              
          distributions) “shall be applied without regard to any community            
          property laws”.  Thus, at first blush, it appears that the answer           
          to our question is that the husband is taxable on 100-percent of            
          the distribution notwithstanding the fact that his former wife              
          owned and was entitled to receive 50 percent of the distributed             
          proceeds.  As petitioner observes, however, the Commissioner                

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