Zedaker worked for the state of California as a teacher. In 1986, Zedaker resigned and withdrew all of the funds in her state retirement account. Zedaker paid all required taxes on the withdrawal. In 1991, Zedaker became a teacher again and redeposited $149,553.01 in her state retirement account. In 2004, Zedaker turned 60 and retired, and the annuity from her retirement account began. In 2008, Zedaker’s annual gross distribution from the account was $19,100. The state reported to Zedaker on Form 1099-R that $13,311 of her distribution was taxable. Zedaker did not report any of the $19,100 on her 2008 income tax return. The Internal Revenue Service (IRS) issued a notice of deficiency based on section 72(d) of the Internal Revenue Code, which permitted taxpayers to exclude from gross income any portion of annuity payments from an employer retirement plan that equaled less than the taxpayer’s contribution to the plan divided by the number of anticipated annuity payments. Zedaker argued that all distributions she received from her annuity should be tax-free until she recovered her full contribution into the retirement account. Zedaker argued that after that recovery, all distributions she received from her annuity should be taxed in full. Otherwise, Zedaker argued, she would not be able to recover her full contribution until she was 90 years old, past her life expectancy. The IRS moved for summary judgment.