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this figure to $80,000. The amortized growth rate petitioner
used to determine the value of his accounts 30.4 years hence was
29 percent per year.4 The sole purpose of this process was to
determine the maximum amount that could be distributed to
petitioner from his qualified plans that would avoid imposition
of the 10-percent additional tax under section 72(t) and would
satisfy the provisions of section 72(t)(2)(A)(iv).
Petitioner used the 29-percent annual growth rate by
analyzing the performances of various mutual funds and their
rates of return over a given period of years. From a group of 83
funds, he selected seven mutual funds in which he would invest
his IRA account funds. Using rates of return for these funds
that he obtained from the Internet, petitioner took the
cumulative return of each of the seven funds, which he divided by
the relevant number of years to arrive at that fund’s average
annual return. He used data dating back 5 years for five of the
funds, 3 years for one fund, and 1 year for another fund.
Petitioner then added up these averages and divided by seven,
resulting in an overall average annual return of 34.65 percent
4 At trial, petitioner introduced a schedule based on an
assumed life expectancy of 27 years for purposes of calculating
his periodic distribution amount. However, respondent pointed
out, and petitioner did not dispute, that petitioner actually
used a life expectancy factor of 30.4 years as set forth in Table
V of sec. 1.72-9, Income Tax Regs. Respondent did not challenge
petitioner’s use of a life-expectancy factor of 30.4 years.
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