Lee E. Seidel - Page 12

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          of the debts to First Community Financial Services, in the amount           
          of $15,503, which were paid off by the proceeds received from the           
          distribution pursuant to the QDRO.  Respondent relies on the                
          reasoning put forth by this Court in Darby v. Commissioner, 97              
          T.C. 51 (1991), to support this contention.                                 
               Respondent is basically using Ms. Seidel’s arguments relying           
          on community property principles and beneficial recipient as put            
          forth in the companion case to this case in Seidel v.                       
          Commissioner, T.C. Memo. 2005-67, to support his argument that              
          petitioner is responsible for the above portions of the CWSC                
          401(k) plan distribution to Ms. Seidel.                                     
               As previously stated, respondent contends that petitioner              
          should be liable for one-half of the QDRO distribution:  (1) Due            
          to the community property law of California, or (2) due to the              
          “beneficial receipt of the proceeds by petitioner.”                         
               Generally, under section 402(a), a distribution from a                 
          qualified retirement plan is taxed to the distributee.  Section             
          402(a) provides in part:                                                    
                    Except as otherwise provided in this section, any                 
               amount actually distributed to any distributee by any                  
               employees’ trust described in section 401(a) which is exempt           
               from tax under section 501(a) shall be taxable to the                  
               distributee, in the taxable year of the distributee in which           
               distributed, under section 72 (relating to annuities).                 
          Under section 402(a), the general rule is that a distribution               
          from an exempt employees’ trust (under a tax-qualified employees’           
          plan) is taxed to the “distributee” under section 72, which                 

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Last modified: May 25, 2011