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Rev. Rul. 78-406, 1978-2 C.B. 157, states that the direct
transfer of funds from one IRA trustee to a new IRA trustee which
involves no payment or distribution of funds to the IRA
participant is not a rollover contribution because the funds are
not within the direct control or use of the participant.6 See
also Martin v. Commissioner, T.C. Memo. 1992-331, affd. without
published opinion 987 F.2d 770 (5th Cir. 1993). The revenue
ruling further states that this conclusion would apply whether
the bank trustee initiates, or the IRA participant directs, the
transfer of funds. Rev. Rul. 78-406, 1978-2 C.B. at 157-158.
Thus, Rev. Rul. 78-406, supra, indicates that a trustee-to-
trustee transfer which otherwise meets the requirements of the
revenue ruling is not a taxable transaction because no amount is
treated as paid or distributed out of an IRA.
In the instant case, petitioner appears to argue that the
funds withdrawn from the IRA on August 28, 1998, are not
includable in gross income because either (1) the bank mistakenly
rolled over the funds into a nonqualified annuity instead of
correctly rolling over the funds into an IRA or other qualified
plan or (2) the bank mistakenly rolled over the funds instead of
correctly making a trustee-to-trustee transfer to an IRA or other
qualified plan. The parties dispute whether the bank made a
6We note that, although entitled to consideration, revenue
rulings are not precedent. Dixon v. United States, 381 U.S. 68,
73 (1965).
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