Michael J. Barkley - Page 4

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               On January 26, 1998, petitioner received a retirement                  
          distribution of $147,492.46 (the 1998 distribution), his entire             
          beneficial interest in the Pacific Telesis Group Pension Plan               
          (the plan).3  Both petitioner and Mrs. Barkley were 52 years old            
          when petitioner received the 1998 distribution.                             
               In the documents he executed to receive the 1998                       
          distribution, petitioner, as the plan participant, elected to               
          receive the distribution in a single payment.  Although                     
          petitioner also elected not to have State or Federal income tax             
          withheld from the 1998 distribution, $29,498.49 of Federal income           
          tax (20 percent of the distribution) was withheld.  Mrs. Barkley            
          consented to petitioner’s receipt of the 1998 distribution and              
          waived her right to joint and survivor annuity payments.                    
               After petitioner retired from Pacific Bell, he started                 
          attending a local college to pursue a teaching certificate in               
          music and drama.  In 1998 petitioner took only one voice class,             
          but in 1999 he was enrolled in several courses that required him            
          to spend time reading, writing papers, and studying for                     
          examinations.  By February 2001, petitioner had dropped out of              
          school completely because of the pressures of caring for Mrs.               
          Barkley and managing the apartment complex.                                 

               3We assume, and the parties have not disputed, that the                
          Pacific Telesis Group Pension Plan was a qualified plan within              
          the meaning of sec. 401(a).                                                 

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