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provides an exception to the general rule where the entire amount
received is rolled over into an IRA or individual retirement
annuity for the benefit of the distributee within 60 days after
the receipt of the distribution. Additionally, distributions are
not includable in a distributee's income to the extent that any
distribution, or any portion of any distribution, is allocable to
the distributee's "investment in the contract." Sec. 72(e)(2).
Generally, however, the basis of an IRA is zero. Sec. 1.408-
4(a)(2), Income Tax Regs.; Costanza v. Commissioner, T.C. Memo.
1985-317.
Petitioners admitted receipt of the $11,281 distribution
from petitioner's Bank of America IRA in 1997 and reported the
distribution on their return for that year, even though they
failed to include the distribution in gross income. Petitioners
do not qualify for the rollover exception provided in section
408(d)(3) because petitioners did not roll over any portion of
the distribution into another IRA or other retirement account.
Moreover, petitioners failed to show that they made any
nondeductible or excess contributions to the IRA that would have
increased their basis therein, and, thus, petitioners' tax basis
in the IRA was zero. Patrick v. Commissioner, T.C. Memo. 1998-
30, affd. 181 F.3d 103 (6th Cir. 1999). Petitioners do not
claim, and nothing in the record suggests, that petitioners
should otherwise be given credit for any investment in the IRA
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