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Discussion5
Generally, any amount paid or distributed out of an
individual retirement plan is includable in the payee’s or
distributee’s gross income as provided in section 72. Sec.
408(d)(1); Arnold v. Commissioner, 111 T.C. 250, 253 (1998).
However, “rollover contributions” are not includable in gross
income. Sec. 408(d)(3); Lemishow v. Commissioner, 110 T.C. 110,
112 (1998), supplemented 110 T.C. 346 (1998). To qualify as a
rollover contribution, a payment or distribution from an
individual retirement plan must be rolled over into an IRA or
other qualified plan within 60 days of the payment or
distribution. Sec. 408(d)(3); Schoof v. Commissioner, 110 T.C.
1, 7 (1998); Metcalf v. Commissioner, T.C. Memo. 2002-123; sec.
1.408-4(b)(1) and (2), Income Tax Regs.
5In certain circumstances, if the taxpayer introduces
credible evidence with respect to any factual issue relevant to
ascertaining the proper tax liability, sec. 7491 places the
burden of proof on the Secretary. Sec. 7491(a). Sec. 7491(c)
operates to place the burden of production on the Secretary in
any court proceeding with respect to the liability of the
taxpayer for penalties and additions to tax. Sec. 7491 is
effective with respect to court proceedings arising in connection
with examinations commencing after July 22, 1998. Internal
Revenue Service Restructuring and Reform Act of 1998, Pub. L.
105-206, sec. 3001(c), 112 Stat. 727. The examination in the
instant case commenced after July 22, 1998. However, for
purposes of deciding whether the $39,295.08 attributable to the
IRA is includable in petitioner’s gross income for 1998, we need
not base our decision on the burden of proof because the record
contains sufficient evidence with which to decide the issue.
With respect to respondent’s burden of production under sec.
7491(c) for the accuracy-related penalty, see infra page 11.
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