96 STAT. 546
PUBLIC LAW 97-248—SEPT. 3, 1982 allocable to investment in the contract after August 13, 1982, shall be t r e a t e d a s from a contract entered into after such date. "(C)
CERTAIN
LIFE
INSURANCE A N D ENDOWMENT CON-
TRACTS.—Except to the extent prescribed by the Secretary by regulations, this paragraph shall apply to any a m o u n t not received as a n a n n u i t y which is received under a life insurance or endowment contract. "(D)
CONTRACTS UNDER
QUALIFIED PLANS.—This
para-
g r a p h shall apply to any a m o u n t received— "(i) from a t r u s t described in section 401(a) which is exempt from tax under section 501(a), "(ii) from a contract— "(I) purchased by a t r u s t described in clause (i), "(II) purchased as part of a plan described in section 403(a), "(III) described in section 403(b), or "(IV) provided for employees of a life insurance company under a plan described in section 805(d)(3), or "(iii) from a n individual retirement account or a n individual retirement a n n u i t y. "(E)
FULL
REFUNDS,
SURRENDERS,
REDEMPTIONS, AND
MATURITIES.—This paragraph shall apply to— "(i) any a m o u n t received, w h e the r in a single sum or otherwise, under a contract in full discharge of the obligation under the contract which is in the n a t u r e of a refund of the consideration paid for the contract, and "(ii) any a m o u n t received under a contract on its complete s u r r e n d e r, redemption, or m a t u r i t y. In the case of any a m o u n t to which the preceding sentence applies, the rule of paragraph (2)(A) shall not apply. "(6) INVESTMENT I N THE CONTRACT.—For purposes of t h i s sub-
section, the investment in the contract as of any date is— "(A) the aggregate a m o u n t of p r e m i u m s or other consideration paid for the contract before such date, m i n u s "(B) the aggregate a m o u n t received under the contract before such date, to the extent that such a m o u n t was excludable from gross income under this subtitle or prior income tax laws." (b) 5-PERCENT PENALTY FOR CERTAIN P R E M A T U R E DISTRIBUTIONS.—
95 Stat. 278.
(1) IN GENERAL.—Section 72 (relating to annuities; certain proceeds of endowment and life insurance contracts) is amended by redesignating subsection (q) as subsection (r) and by adding after subsection (p) the following new subsection: "(q) 5 - P E R C E N T P E N A L T Y FOR P R E M A T U R E DISTRIBUTIONS F R O M A N N U I T Y CONTRACTS.— "(1) IMPOSITION OF PENALTY.—
"(A) IN GENERAL.—If any tax p a y e r receives any a m o u n t under a n a n n u i t y contract, the taxpayer's tax under this chapter for the taxable year in which such a m o u n t is received shall be increased by a n a m o u n t equal to 5 percent of the portion of such a m o u n t includible in gross income which is properly allocable to any investment in the annuity contract made during the 10-year period ending on the date such a m o u n t was received by the taxpayer.
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