Wayne Smith - Page 14



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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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