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exemption with respect to Tyrone even though Tyrone is not his
dependent. Petitioner is mistaken. Pursuant to section 151(a),
a taxpayer is entitled to claim a dependency exemption only with
respect to a dependent as defined in section 152. Respondent is
sustained on this issue.
Annuity Distributions
On his Form 1040A, petitioner admitted receiving $6,468 of
taxable distributions from his Travelers annuity account. In
addition, petitioner has stipulated that these annuity
distributions were taxable. Inconsistently, petitioner now
contends that some, or possibly all, of the distributions were
loans. The evidence, which includes petitioner’s annuity
surrender requests to Travelers and the Forms 1099-R prepared by
Travelers, indicates that the distributions were not loans, but
rather represented in part a payment in partial surrender of
petitioner’s annuity account and in part a loan closure, whereby
a portion of petitioner’s annuity balance was applied to
discharge the loan, resulting in a taxable distribution. See
Duncan v. Commissioner, T.C. Memo. 2005-171; cf. Royal v.
Commissioner, T.C. Memo. 2006-72.
Section 72(t) imposes a 10-percent additional tax on
premature distributions from a “qualified retirement plan”, which
is defined to include a section 403(b) annuity contract. Sec.
4974(c)(3). The additional tax does not apply to distributions
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