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1993, 1994, and 1995 income tax returns. Thus, petitioners’ tax
returns for 1993, 1994, and 1995 and petitioner’s Forms W-2 for
those years show that petitioners did not include in income the
contributions to his section 401(k) account for those years.
Bechtel made contributions to petitioner’s section 401(k)
account in 1992. Petitioners’ 1992 return is not in evidence.
We assume that petitioners and Bechtel treated the 1992
contributions like those made in 1993, 1994, or 1995.
We conclude that petitioners had not previously included in
income the funds petitioner deposited in his IRA, and that his
IRA distribution is included in petitioners’ income in 1996.
3. Petitioners’ Other Contentions
Petitioners contend that they did not receive $78.95 in
interest as part of the distribution from the IRA in 1996 because
petitioner’s retirement plan had losses in 1995 and 1996. We
disagree. The earnings on the accounts exceeded the losses.
Petitioner rolled over $69,421.05 to his IRA in 1995 and received
$69,500 from the IRA in 1996. Petitioner made no contributions
to the IRA after the rollover. We conclude that the difference
of $78.95 between the $69,500 distribution in 1996 and the
$69,421.05 rollover in 1995 is taxable interest.
Petitioners point out that they and respondent had settled a
case involving petitioners’ tax years 1977 through 1988, docket
No. 13027-92S, and contend that settlement binds respondent here.
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