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income tax return in which respondent treated the $60,000
distribution from petitioner’s IRA as taxable income to
petitioner against which an additional 10-percent tax applied,
reflecting a total $22,252 tax deficiency. Also, respondent
determined that petitioner was liable for a $4,450 accuracy-
related penalty relating to petitioner’s failure to report the
$60,000 IRA distribution as taxable income.
Discussion
Petitioner argues that the August 4, 1999, transfer of
$60,000 out of Norman’s IRA to petitioner’s IRA should be treated
as taxable to Norman, thereby giving petitioner a $60,000 tax
basis in the $60,000 transferred into her IRA, resulting in zero
taxable income on the distribution of the $60,000 out of her IRA.
Petitioner contends that the reason the $60,000 transfer out
of Norman’s IRA should be taxable to Norman is that the court’s
order (directing equal division of Norman’s $120,000 IRA but not
expressly directing establishment of a new IRA for petitioner’s
benefit into which $60,000 necessarily would be transferred) does
not satisfy a requirement of section 408(d)(6) for Norman’s
distribution to be treated as a tax-free rollover.1
1 Sec. 408(d)(6) provides as follows:
TRANSFER OF ACCOUNT INCIDENT TO DIVORCE.--The transfer
of an individual’s interest in an * * * [IRA] to his spouse
or former spouse under a divorce or separation instrument
described in subparagraph (A) of section 71(b)(2) is not to
(continued...)
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