- 6 - 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 (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011