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Section 408(d)(1) provides that any amount paid or
distributed out of an individual retirement plan must be included
in gross income by the distributee in the manner provided under
section 72,2 except as otherwise provided. The term “individual
retirement plan” includes an IRA. Sec. 7701(a)(37). However,
the amount distributed from an individual retirement plan is not
subject to tax if the amount is rolled over into an individual
retirement account or individual retirement annuity within 60
days of the distribution. See sec. 408(d)(3). In the instant
case, petitioner concedes that he made no rollover contribution
after receiving the original check from SouthTrust Bank.
Cash method taxpayers must include all items of gross income
in the taxable year of actual or constructive receipt.3 Section
1.451-2(a), Income Tax Regs., sets forth the general rule for
constructive receipt of income as follows:
2Sec. 72(a) provides:
SEC. 72(a). General Rule for Annuities.-- Except
as otherwise provided in this chapter, gross income
includes any amount received as an annuity (whether for
a period certain or during one or more lives) under an
annuity, endowment, or life insurance contract.
3Sec. 1.446-1(c)(1)(i), Income Tax Regs., provides:
(i) Cash receipts and disbursements method. Generally,
under the cash receipts and disbursements method in the
computation of taxable income, all items which constitute
gross income (whether in the form of cash, property, or
services) are to be included for the taxable year in which
actually or constructively received. * * *.
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Last modified: May 25, 2011