- 7 - 74, 77 (1986). Petitioner failed to establish that Mr. Spuler made nondeductible contributions to the IRA.2 Thus, the entire distribution is includable in gross income. Petitioner additionally argues that he is not liable for tax on the IRA distribution. Mr. Spuler’s will provides that all Federal, State, and other death taxes associated with the transfer of property from his estate to his beneficiaries will be paid by his estate, and that none of the beneficiaries are liable for the taxes. State law determines the legal rights and interests in property and transfers thereof. However, Federal law determines the manner and extent to which such rights and interests will be subjected to Federal tax. See Helvering v. Stuart, 317 U.S. 154, 161 (1942); Morgan v. Commissioner, 309 U.S. 78 (1940); Estate of Sweet v. Commissioner, 234 F.2d 401 (10th Cir. 1956), affg. 24 T.C. 488 (1955); Estate of Bennett v. Commissioner, 100 T.C. 42, 59 (1993). We conclude that the terms of Mr. Spuler’s will do not affect petitioner’s liability for the IRA distribution, and he must include the full amount in gross income. Deductions for a SEP A SEP plan is described in section 408(k). An employer may make contributions to an employee’s retirement account. See sec. 2 As a result of our conclusions, we need not consider whether petitioner had a basis in the IRA arising from nondeductible contributions made by his father.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011