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Generally, a distribution from an IRA is includable in an
individual’s gross income in the year in which the distribution
in received. Sec. 408(d); see sec. 1.408-4(a), Income Tax Regs.;
see also Schoof v. Commissioner, 110 T.C. 1, 7 (1998); Gallagher
v. Commissioner, T.C. Memo. 2001-34. A distribution may be tax-
exempt if the funds distributed from an IRA to the individual for
whose benefit the account is maintained are rolled over to
another IRA for the benefit of such individual, provided certain
criteria are met. Sec. 408(d)(3)(A). Those criteria are:
(i) the entire amount received (including money
and any other property) is paid into an individual
retirement account or individual retirement annuity
(other than an endowment contract) for the benefit of
such individual not later than the 60th day after the
day on which he receives the payment or distribution;
(ii) no amount in the account and no part of the
value of the annuity is attributable to any source
other than a rollover contribution (as defined in
section 402) from an employee’s trust described in
section 401(a) which is exempt from tax under section
501(a) or from an annuity plan described in section
403(a) (and any earnings on such contribution), and the
entire amount received (including property and other
money) is paid (for the benefit of such individual)
into another such trust or annuity plan not later than
the 60th day on which the individual receives the
payment or the distribution; or
(iii)(I) the entire amount received (including
money and other property) represents the entire
interest in the account or the entire value of the
annuity,
(II) no amount in the account and no
part of the value of the annuity is
attributable to any source other than a
rollover contribution from an annuity
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Last modified: May 25, 2011