Magellean Askew, Jr. - Page 7

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          certifying that the policy had been lost or destroyed.                      
               In June 2001, petitioner received checks in full settlement            
          of the current cash surrender value of each policy as follows:              
                  Date   Accumulated Loan PayoffCash   Surrender     Net              
          Account Paid Cash Value    Value      Value1 Penalty Distribution2          
          7142446 Jun 11   $12,434  3$6,429     $6,005 $2,126   $3,879                
          7142859 Jun 26    10,590  4 8,896     1,694  858      836                   
          7166534 Jun 11     4,700  -0-         4,700  592         53,286             
               1  Cash value equals accumulated cash value less loan payoff value.    
               2  Net distribution equals cash value less surrender penalty.          
               3  On June 14, 1999, College Life sent petitioner a “loan check” of    
          $4,711.  Petitioner deposited this check into his wife’s account at First   
          South Credit Union (FSCU).  Although petitioner claims that his wife’s account
          is an annuity account, there is no evidence in the record to support his    
          claim.  Rather, based on the documents in the record, it appears that the   
          account is a savings account.                                               
               4  On June 7, 1999, College Life sent petitioner a “loan check” of     
          $3,182.  Petitioner deposited this check into his wife’s account at FSCU.   
               5  This computation includes a reduction for Federal income tax withheld
          of $822.                                                                    
          At the time of the distributions, petitioner was under 59-1/2               
          years of age, he was not disabled, and he had been employed with            
          Memphis City Schools continually since 1980.                                
               Americo issued to petitioner three Forms 1099-R,                       
          Distributions From Pensions, Annuities, Retirement or Profit-               
          Sharing Plans, IRAs, Insurance Contracts, etc., for 2001                    
          reporting the following amounts as taxable distributions:                   
                Account       Distribution1   Withholding    Code                     
                7142446       $10,308         -0-             2 3                     
                7142859       9,731           -0-               3                     
                7166534       4,107           $822            3 2                     
                1  Distribution amount equals accumulated cash value less             
          surrender penalty.                                                          
                2  Distribution code 3 is defined as a distribution on                
          account of a disability, which is not subject to the 10-percent             
          additional tax under sec. 72(t)(2)(A)(iii).                                 
                3  Distribution code 2 is defined as an early distribution            
          with an applicable exception from the 10-percent additional tax             





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