Robert C. and Carol S. Jacobsen - Page 9

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                    retirement plan (as defined in section 4974(c)),                  
                    the taxpayer’s tax under this chapter for the                     
                    taxable year in which such amount is received                     
                    shall be increased by an amount equal to                          
                    10 percent of the portion of such amount which is                 
                    includible in gross income.                                       
                           (2) Subsection not to apply to certain                     
                    distributions.--Except as provided in paragraphs                  
                    (3) and (4), paragraph (1) shall not apply to any                 
                    of the following distributions:                                   
                              (A) In general.--Distributions which                    
                                   (i) made on or after the date on                   
                              which the employee attains age 59-1/2,                  
                                   (ii) made to a beneficiary (or to                  
                              the estate of the employee) on or after                 
                              the death of the employee,                              
                                   (iii) attributable to the                          
                              employee’s being disabled within the                    
                              meaning of subsection (m)(7),                           
                                   (iv) part of a series of                           
                              substantially equal periodic payments                   
                              (not less frequently than annually) made                
                              for the life (or life expectancy) of the                
                              employee or the joint lives (or joint                   
                              life expectancies) of such employee and                 
                              his designated beneficiary, * * *                       
          Section 72(m)(7) provides:                                                  
                    (m) Special Rules Applicable to Employee Annuities                
               and Distributions Under Employee Plans.--                              
                           *    *    *    *    *    *    *                            
                           (7) Meaning of disabled.--For purposes of                  
                    this section, an individual shall be considered to                
                    be disabled if he is unable to engage in any                      
                    substantial gainful activity by reason of any                     
                    medically determinable physical or mental                         
                    impairment which can be expected to result in                     
                    death or to be of long-continued and indefinite                   

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