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participants to apply for loans from their TESPHE accounts
subject to the plan’s repayment provisions. If the participant
does not comply with TESPHE’s loan repayment provisions, then the
outstanding loan balance will be deemed a distribution subject to
Federal income taxes and any applicable early withdrawal
penalties.
Between 1989 and 1995, petitioner borrowed funds from his
TESPHE account as follows:
Date Amount
September 30, 1989 $9,300
August 31, 1993 16,500
May 31, 1994 8,800
February 28, 1995 5,300
Total 39,900
Fidelity did not report any of these loans made to petitioner as
deemed distributions from his TESPHE account subject to Federal
income taxes. Likewise, petitioner did not include any of the
loan proceeds on his Federal income tax return for the 1989,
1993, 1994, or 1995 taxable year. Petitioner repaid the loans
according to TESPHE’s loan provisions.
Prior to residing in Georgia, petitioner lived with his
former wife in their jointly owned residence in Detroit,
Michigan. Petitioner and his former wife purchased their
Michigan residence in 1985. During 1997, petitioner separated
from his former wife. In 1998 petitioner was transferred by Ford
and moved to Georgia. Petitioner started construction on his
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