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joint lives (or joint life expectancies) of such employee and his
designated beneficiary.” Sec. 72(t)(2)(A)(iv). Petitioners must
prove they are not liable for the 10-percent additional tax.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).5
Section 72(t)(2)(A)(iv) does not provide how to determine or
calculate a series of substantially equal periodic payments to
qualify for the exception. However, the IRS has provided three
permissible methods for calculating such a series. IRS Notice
89-25, Q&A-12, 1989-1 C.B. 662, 666. Petitioner chose the second
of the three methods, known as the fixed amortization method.
Rev. Rul. 2002-62, 2002-42 I.R.B. 710. The fixed amortization
method involves amortizing a taxpayer’s IRA account balance over
the account owner’s life expectancy at an interest rate that does
not exceed a reasonable rate of interest on the date that
payments commence. IRS Notice 89-25, Q&A-12, 1989-1 C.B. supra
at 666. The parties agree that the fixed amortization method
provided in IRS Notice 89-25 is a permissible way to calculate a
series of substantially equal periodic payments.6
5 Sec. 7491, under certain circumstances, places the
burden of proof on respondent with respect to a taxpayer’s
liability for taxes in court proceedings arising in connection
with examinations commencing after July 22, 1998. In this case,
the examination of petitioners’ returns commenced before the
effective date; therefore, the burden remains with petitioners.
6 Although the Court is not bound by IRS Notice 89-25,
1989-1 C.B. 662, its methodology will be applied based on the
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