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the individual for whose benefit an IRA is maintained is excluded
from gross income, however, if the entire amount is paid into an
IRA for the benefit of the same individual within 60 days. Sec.
408(d)(3)(A). Exclusion of a rollover from one IRA to another
can only be made by an individual once during any 1-year period.
Sec. 408(d)(3)(B). However, the transfer of a taxpayer’s funds
directly from the trustee of one IRA to the trustee of another
IRA, in a fashion that does not involve any payment directly to
the taxpayer, is not a “rollover” for purposes of section
408(d)(3) and therefore does not trigger or violate the 1-year
limitation. Rev. Rul. 78-406, 1978-2 C.B. 157; see also Crow v.
Commissioner, T.C. Memo. 2002-178; Martin v. Commissioner, T.C.
Memo. 1992-331, affd. without published opinion 987 F.2d 770 (5th
Cir. 1993).
On their Federal income tax return, petitioners reported the
rollovers of $286,390 from Plan 15105 and $463,930 from Plan
15106 to the Fidelity IRA, the subsequent direct rollovers of
$500,000 and $62,390 from the Fidelity IRA to the US Bancorp IRA,
and the distributions from the Fidelity IRA and the US Bancorp
IRA to petitioners totaling $749,930. The parties agree that the
rollovers from Plan 15105 and Plan 15106 to the Fidelity IRA and
the direct rollovers of $500,000 and $62,930 from Fidelity IRA to
the US Bancorp IRA are excluded from income. See sec. 402(c);
Rev. Rul. 78-406, 1978-2 C.B. 157. The parties also agree that
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