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address respondent’s determination that the IRA distributions are
includable in their 1996 income. Consequently, we consider
petitioners to have conceded the correctness of that
determination. Moreover, based upon the evidence presented, we
are satisfied that petitioners’ deemed concession is consistent
with controlling law.2 The IRA distributions are includable in
petitioners’ 1996 income, and respondent’s determination in this
regard is sustained.
Because respondent has not challenged any of the deductions
taken on petitioners’ 1996 return, we need not discuss the merits
of petitioners’ claim that respondent erred by disallowing the
deduction for the plan’s “investment losses” taken on that
return.
2 Distributions from an IRA are includable in the
taxpayer’s/distributee’s income in accordance with sec. 72.
See sec. 408(d). The IRA distributions were not received as an
annuity by petitioner. Consequently, the distributions are
includable in petitioners’ income, except to the extent that any
distribution, or any portion of any distribution, is allocable to
petitioners’ “investment in the contract.” Sec. 72(e)(2).
Petitioners do not claim that petitioner made nondeductible
contributions to the IRA. Consequently, we proceed as though his
tax basis in the IRA were zero. Nor do petitioners claim, and
nothing in the record suggests, that petitioners should otherwise
be given credit for any investment in the IRA, within the meaning
of sec. 72(e)(3)(A)(ii) and 72(e)(6). Consequently, the entire
amount of the distribution is allocated to, and must be included
in, petitioner's income. See sec. 72(e)(3)(A).
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Last modified: May 25, 2011