Michael J. Barkley - Page 13

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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             
                    (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                  
                         (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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