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In the present circumstance, respondent is caught in a
potential “whipsaw” position. A whipsaw occurs when different
taxpayers treat the same transaction involving the same items
inconsistently, thus creating the possibility that income could
go untaxed or two unrelated parties could deduct the same
expenses on their separate returns. In such circumstances,
respondent is fully entitled to defend against inconsistent
results by determining in notices of deficiency that both parties
to the transaction are liable for the deficiency. Estate of
Dooley v. Commissioner, T.C. Memo. 1992-557; Moore v.
Commissioner, T.C. Memo. 1989-306.
Petitioner contends that Mr. Seidel 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 Mr. Seidel”. We note that contrary to her
contention, petitioner claimed the entire credit of $15,400 for
the Federal income tax withheld on the total $77,000 distribution
from Mr. Seidel’s CWSC 401(k) plan, together with the entire
itemized deduction of $1,540 for the State and local income taxes
withheld on the $77,000 distribution.
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
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