- 6 - underlying liability for 2000 in their hearing request, at the hearing, and in the petition. Accordingly, petitioners’ underlying liability is properly before the Court, and we review that issue de novo. See Montgomery v. Commissioner, 122 T.C. 1 (2004); Sego v. Commissioner, supra; Goza v. Commissioner, supra. We shall review the remainder of respondent’s determination for an abuse of discretion. See Sego v. Commissioner, supra. Section 402(a) provides generally that distributions from a qualified plan are taxable to the distributee, in the taxable year of the distributee in which distribution occurs, pursuant to section 72. Section 72(p)(1)(A) provides the general rule that proceeds of a loan from a qualified employer plan to a plan participant are treated as a taxable distribution to the participant in the year in which the loan proceeds are received. See Patrick v. Commissioner, T.C. Memo. 1998-30, affd. 181 F.3d 103 (6th Cir. 1999). Section 72(p)(2), however, provides an exception to this general rule. Under this exception, a loan is not treated as a taxable distribution if: (1) The principal amount of the loan (when added to the outstanding balance of all other loans from the same plan) does not exceed a specified limit, sec. 72(p)(2)(A); (2) the loan, by its terms, must be repaid within 5 years from the date of its inception or is made to finance the acquisition of a home which is the principal residence of the participant, sec. 72(p)(2)(B); and (3) the loanPage: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011