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taxpayer.
This concept of voluntariness is also echoed in Arnold v.
Commissioner, 111 T.C. 250 (1998), concerning the recapture tax
provision under section 74(t)(4), and United States v. Novak, 476
F.3d 1041 (9th Cir. 2007), addressing section 72(t)(2)(A)(vii).
In Arnold, the taxpayer elected to receive a series of
substantially equal payments from an IRA pursuant to section
72(t)(4)(A) when he retired from his own company at age 55. Four
years later, when he sold the business for less profit than he
anticipated, he received an additional distribution from his
account to compensate him for his loss of anticipated revenue.
This Court held that petitioner’s receipt of an additional
distribution did not fall within one of the exceptions provided
in section 72(t)(2)(A) and was an impermissible modification to
the prior series of substantially equal periodic payments, thus
triggering the recapture tax under section 72(t)(4). Arnold v.
Commissioner, supra at 255-256.
In Novak, the Court of Appeals for the Ninth Circuit
examined whether the IRS possessed the power to levy upon an
ERISA account to compensate the victims of the defendant’s
crimes,2 and where the defendant’s right to access the account
2 Notably, in Murillo v. Commissioner, T.C. Memo. 1998-13
(1998), affd. without published opinion 166 F.3d 1201 (2d Cir.
1998), the Court held that a taxpayer’s forfeit of his retirement
plan as part of his criminal plea would also not trigger
application of the 10-percent additional tax under sec. 72(t)(1).
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