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qualified employer retirement plans. See also sec. 402(a).
Section 72(a) reiterates the general rule of inclusion in gross
income, unless otherwise provided. Section 72(b),3 however,
provides that portions of annuity payments may be excludable from
income. The excludable portion of a payment generally is that
portion which bears the same ratio to such payment as the
“investment in the contract” bears to the expected return under
the contract, determined at the time the annuity payments begin.
Sec. 72(b)(1). While the term “investment in the contract” is
defined generally as “the aggregate amount of premiums or other
consideration paid for the contract”, sec. 72(c)(1)(A),
contributions made by an employer on behalf of an employee-
taxpayer which were not includable in the taxpayer’s gross income
generally are not part of the taxpayer’s investment in the
contract, sec. 72(f).
In 2000, petitioner received $3,146 in survivor annuity
payments from the “General Retirement Plan for Employees of
3SEC. 72. ANNUITIES; CERTAIN PROCEEDS OF ENDOWMENT AND LIFE
INSURANCE CONTRACTS.
* * * * * * *
(b) Exclusion Ratio.--
(1) In general.--Gross income does not include
that part of any amount received as an annuity under an
annuity, endowment, or life insurance contract which
bears the same ratio to such amount as the investment
in the contract (as of the annuity starting date) bears
to the expected return under the contract (as of such
date).
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Last modified: May 25, 2011