Michael J. Barkley - Page 9

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          distribution, leaving only the deduction authorized by section              
               Respondent, on the other hand, contends that petitioner must           
          include the entire amount of the 1998 distribution in his gross             
          income.  Respondent also contends that petitioner and Mrs.                  
          Barkley are not eligible to claim the benefit of forward                    
          averaging under section 402(d) because petitioner did not elect             
          the application of section 402(d) and because neither petitioner            
          nor Mrs. Barkley had attained the age of 59� when petitioner                
          received the 1998 distribution.  Respondent further contends that           
          section 402(d) does not allow a deduction unless the amount                 
          deducted is also included in gross income and is subject to the             
          separate tax imposed by section 402(d)(1) and that, because Mrs.            
          Barkley is not a “distributee”, she is not liable for any tax on            
          the distribution.                                                           
               The parties’ arguments are difficult to understand, given              
          petitioner’s admissions that the entire 1998 distribution is                
          includable in income on his 1998 joint Federal income tax return            
          and that section 402(d) does not apply to his share of the 1998             
          distribution.  Even if we assume, for the sake of discussion,               
          that Mrs. Barkley had a community property interest in the 1998             
          distribution as petitioner contends, the entire 1998 distribution           
          must still be included in the income reported on the 1998 joint             
          return.  As we understand petitioner’s arguments, what he is                

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