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deduction for the total taxable amount8 of a lump-sum
distribution shall be allowed only to the extent the lump-sum
distribution is included in the taxpayer’s gross income in the
taxable year. For purposes of section 402(d), the term “lump sum
distribution” is a term of art referring to a distribution that
meets the requirements of section 402(d) and qualifies for the
special tax treatment afforded thereby. Because the 1998
distribution was not received on or after petitioner attained the
age of 59�, see sec. 402(d)(4)(A) and (B), it was not a lump-sum
distribution eligible for forward averaging, and, consequently,
the special rules of section 402(d) simply do not apply.
For the aforementioned reasons, therefore, we hold that
petitioner may not deduct any portion of the 1998 distribution
under section 402(d).
8“Total taxable amount” is defined by sec. 402(d)(4)(D) as
follows:
(D) Total taxable amount.-–For purposes of this
section and section 403, the term “total taxable
amount” means, with respect to a lump sum distribution,
the amount of such distribution which exceeds the sum
of--
(i) the amounts considered contributed
by the employee (determined by applying
section 72(f)), reduced by any amounts
previously distributed which were not
includible in gross income, and
(ii) the net unrealized appreciation
attributable to that part of the distribution
which consists of the securities of the
employer corporation so distributed.
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