Form 4972 Tax on Lump-Sum Distributions 2008

Summary: This is an example of Form 4972 (2008) with information as pertaining to the text. The line items are completed as follows:

“Name of recipient of distribution” field contains Mary Brown

“Identifying number” field contains 005-00-6789

Under“Part I: Complete this part to see if you can use Form 4972”:

“1. Was this a distribution of a plan participant's entire balance (excluding deductible voluntary employee contributions and certain forfeited amounts) from all of an employer's qualified plans of one kind (pension, profit-sharing, or stock bonus)? If No, do not use this form. YES” checkbox checked

“2. Did you roll over any part of the distribution? If Yes, do not use this form. NO” checkbox checked

“3. Was this distribution paid to you as a beneficiary of a plan participant who was born before 1936? NO” checkbox checked

“4. Were you (a) a plan participant who received this distribution, (b) born before 1936, and (c) a participant in the plan for at least 5 years before the year of the distribution? YES” checkbox checked

“5a. Did you use Form 4972 after 1986 for a previous distribution from your own plan? If Yes, do not use this form for a 2008 distribution from your own plan. NO” checkbox checked

Under“Part III: Complete this part to choose the 10-year tax option (see instructions)”:

“8. Ordinary income from Form 1099-R, box 2a minus box 3. If you did not complete Part II, enter the taxable amount from Form 1099-R, box 2a” field contains 160,000

“10. Total taxable amount. Subtract line 9 from line 8” field contains 160,000

“11. Current actuarial value of annuity from Form 1099-R, box 8. If none, enter 0” field contains 10,000

“12. Adjusted total taxable amount. Add lines 10 and 11. If this amount is $70,000 or more, skip lines 13 through 16, enter this amount on line 17, and go to line 18” field contains 170,000

“17. Subtract line 16 from line 12” field contains 170,000

“19. Subtract line 18 from line 17. If line 11 is zero, skip lines 20 through 22 and go to line 23” field contains 170,000

“20. Divide line 11 by line 12 and enter the result as a decimal (rounded to at least three places)” field contains .0588

“22. Subtract line 21 from line 11” field contains 10,000

“23. Multiply line 19 by 10% (.10)” field contains 17,000

“24. Tax on amount on line 23. Use the Tax Rate Schedule in the instructions” field contains 2,917

“25. Multiply line 24 by ten (10). If line 11 is zero, skip lines 26 through 28, enter this amount on line 29, and go to line 30” field contains 29,170

“26. Multiply line 22 by 10% (.10)” field contains 1,000

“27. Tax on amount on line 26. Use the Tax Rate Schedule in the instructions” field contains 110

“28. Multiply line 27 by ten (10)” field contains 1,100

“29. Subtract line 28 from line 25. Multiple recipients, see instructions” field contains 28,070

“30. Tax on lump-sum distribution. Add lines 7 and 29. Also include this amount in the total on Form 1040, line 44, Form 1040NR, line 41, or Form 1041, Schedule G, line 1b, whichever applies” field contains 28,070