Stephen R. Jones - Page 4

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          A Judgment of Dissolution of Marriage between petitioner and Ms.            
          Jones was filed on January 5, 1995, terminating the marital                 
          status of petitioner and Ms. Jones as of December 24, 1994.                 
               Petitioner’s 1994 Federal income tax return, which he filed            
          on July 15, 1996, did not report the $68,121 distribution from              
          the Prudential IRA as income.                                               
          Issue 1.  Taxability of the IRA Distribution                                
               Section 408(d)(1) provides that any amount distributed from            
          an IRA “shall be included in gross income by the payee or                   
          distributee, as the case may be, in the manner provided under               
          section 72.”  Petitioner contends that by endorsing his IRA                 
          distribution check to his spouse, whom he was divorcing, he                 
          complied with an exception to section 408(d)(1) contained in                
          section 408(d)(6), which provides:                                          
                    (6) TRANSFER OF ACCOUNT INCIDENT TO DIVORCE.--                    
          The transfer of an individual's interest in an individual                   
          retirement account or an individual retirement annuity to his               
          spouse or former spouse under a divorce or separation instrument            
          described in subparagraph (A) of section 71(b)(2) is not to be              
          considered a taxable transfer made by such individual                       
          notwithstanding any other provision of this subtitle, and such              
          interest at the time of the transfer is to be treated as an                 
          individual retirement account of such spouse, and not of such               
          individual.  Thereafter such account or annuity for purposes of             
          this subtitle is to be treated as maintained for the benefit of             
          such spouse.                                                                
               As set forth, there are two requirements that must be met              
          for the exception of section 408(d)(6) to apply:  (1) There must            
          be a transfer of the IRA participant's "interest" in the IRA to             

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