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The recipient of amounts paid or distributed out of a
retirement account generally includes the distributions in gross
income under the provisions of section 72. Sec. 408(d)(1); see
also sec. 61(a)(9), (11); Arnold v. Commissioner, 111 T.C. 250,
253 (1998). The amounts distributed from a retirement account
are generally included in the payee’s gross income for the
taxable year in which the distribution is received. Sec. 1.408-
4(a)(1), Income Tax Regs.
The parties agree that the retirement plan was a qualified
retirement plan. The parties also agree that petitioner actually
received the cash distribution in December 2004. Accordingly,
petitioner must include the distribution in his income for 2004,
the year he received it. See secs. 1.408-4(a)(1), 1.446-
1(c)(1)(i), Income Tax Regs.
Petitioner argues that he intended to use the funds in 2005
and thus is not taxable on the funds until 2005. Petitioner is
misguided. He received the distribution in 2004 and was
therefore taxable on the funds in 2004. See secs. 1.408-4(a)(1),
1.446-1(c)(1)(i), Income Tax Regs. Petitioner relies on various
subsections of section 72, such as (a), (b), and (h), to argue
that the distribution should not be included in his gross income
for any year. Petitioner misapplies the subsections of section
72 upon which he relies. The distribution from the retirement
account was not an annuity, and petitioner did not exercise any
option to receive an annuity with respect to the retirement
account.
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Last modified: November 10, 2007