UNITED STATES TAX COURT
JUANITA DOBY, Petitioner v
.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17756-03S. Filed May 25, 2006.
Juanita Doby, pro se.
Noelle C. White
, for respondent.
GOLDBERG, Special Trial Judge
: This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect at the time the petition was filed. The decision to be entered is not reviewable by any other court, and this opinion should not be cited as authority. Unless otherwise indicated, subsequent section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Lanham, Maryland, on the date the petition was filed in this case.
In taxable year 2000, petitioner received $3,146 in survivor annuity payments from the “General Retirement Plan for Employees of Potomac Electric Power Company”. The financial institution distributing the annuity payments, The Equitable Benefits Payment Services, issued a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc., to petitioner with respect to the annuity payments. The Form 1099-R reported $3,146 in fully taxable benefits paid to petitioner during the 2000 tax year. In addition, the Form 1099-R reported no employee contributions. Petitioner’s spouse did not make any contributions to the plan. Furthermore, the “General Retirement Plan for Employees of Potomac Electric Power Company” states that employee contributions to the plan are not allowed.
Also during taxable year 2000, petitioner received IRA distributions from Educational Systems Employees Credit Union totaling $11,400. Educational Systems Employees Credit Union issued to petitioner a Form 1099-R with respect to the IRA distributions. The Form 1099-R reported $11,400 in fully taxable distributions dispensed to petitioner during the 2000 tax year. Petitioner filed a Form 1040, U.S. Individual Income Tax Return, for the 2000 taxable year. In the 2000 return, 438, 442 (2001)). Section 7491(a)(1) applies only if the taxpayer complies with substantiation requirements, maintains all required records, and cooperates with reasonable requests by the Commissioner for witnesses, information, documents, meetings, and interviews. Sec. 7491(a)(2). Although neither party alleges the applicability of section 7491(a), we conclude that the burden of proof has not shifted to respondent with respect to any of the issues in the present case.
1. Pension Plan Payments
Section 61(a) specifies that, “Except as otherwise provided”, gross income includes “all income from whatever source derived”. The construction of section 61 is broad, and any “‘exclusions to income must be narrowly construed.’” Commissioner v. Schleier , 515 U.S. 323, 328 (1995)(quoting United States v. Burke , 504 U.S. 229, 248 (1992)(Souter, J., concurring in judgment)). Taxpayers seeking an exclusion from gross income must demonstrate that they are eligible for the exclusion and bring themselves “within the clear scope of the exclusion”. Dobra v. Commissioner , 111 T.C. 339, 349 n.16 (1998).
Section 61(a)(9) and (11) provides that annuities and pensions are among the forms of income within the purview of section 61(a). Section 72 pertaining to annuities and pensions (section 61(a)(9) and (11)) sets forth specific rules applicable to taxation of, inter alia, annuities and distributions from Potomac Electric Power Company”. The Form 1099-R issued to petitioner by Equitable Benefits Payment Services with respect to the annuity payments shows that the $3,146 benefits paid to petitioner are fully taxable, and there were no employee contributions. Furthermore, the “General Retirement Plan for Employees of Potomac Electric Power Company” provides that employee contributions to the plan are not allowed, and petitioner testified that her spouse did not make any contributions to the plan.
Petitioner did not report the annuity payments as income on her 2000 Federal income tax return. Instead, petitioner argues that the annuity payments are under the purview of section 101(b) and therefore are not taxable.
Prior to repeal, section 101(b) read as follows:
(b) EMPLOYEES’ DEATH BENEFITS.--(1)General Rule.--Gross income does not include amounts received (whether in a single sum or otherwise) by the beneficiaries or the estate of an employee, if such amounts are paid by or on behalf of an employer and are paid by reason of the death of the employee. * * * However, this subsection does not apply to the case at hand because it was repealed by the Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1402(a), 110 Stat. 1789. The death benefit exclusion applies only to beneficiaries of decedents that died prior to August 21, 1996. See Small Business Job Protection Act of 1996, Pub. L. 104-188, sec. 1403(b), 110 Stat. 1791. Petitioner’s spouse died in 1999. Therefore, the present annuity payments are not subject to the death benefit exclusion provided by section 101(b).
Furthermore, petitioner has not provided any evidence that she or her spouse had an “investment in the contract”. Also, petitioner has not demonstrated that the annuity payments she received are within any exclusion. Therefore, the present annuity payments are taxable, and respondent’s determination on this issue is sustained.
2. IRA Distributions
As previously stated, gross income includes all income from whatever source derived. Sec. 61(a). Section 61(b) specifically includes items included under section 72 (relating to annuities and IRAs).
As a general rule, amounts paid or distributed out of individual retirement plans, including IRAs, are included in gross income when received by the payee or distributee under provisions of section 72. Sec. 408(d)(1). The regulations provide in relevant part as follows:
Except as otherwise provided in this section, any amount actually paid or distributed or deemed paid or distributed from an individual retirement account or individual retirement annuity shall be included in the gross income of the payee or distributee for the taxable year in which the payment or distribution is received.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered under Rule 155 .