John U. Fazi and Sylvia Fazi - Page 1

                                           105 T. C. No. 29                                                



                                       UNITED STATES TAX COURT                                             


                         JOHN U. FAZI AND SYLVIA FAZI, Petitioners v.                                      
                         COMMISSIONER OF INTERNAL REVENUE, Respondent                                      


                  Docket No. 13874-93.                  Filed December 19, 1995.                           


                         P, a dentist, incorporated C and established three                                
                  pension plans.  P was an employee of C.  Plan 2 was                                      
                  frozen in 1982.  Plan 2 was merged into plan 1 in 1986.                                  
                  P dissolved C in 1986 and distributed all of the assets                                  
                  in the plan 1 trust to employees, including P, in 1987.                                  
                  We held in Fazi v. Commissioner, 102 T.C. 695 (1994)                                     
                  (Fazi I), that plan 1 was not qualified and its related                                  
                  trust was not exempt during 1985, 1986, and 1987.  We                                    
                  also held that, except for amounts conceded by R, P was                                  
                  taxable in 1987 on the assets distributed to P from                                      
                  plan 1.  In Fazi I, R conceded on brief that the                                         
                  taxable distribution to P from plan 1 for 1987 had to                                    
                  be reduced by contributions made on P's behalf for 1985                                  
                  and 1986, including P's share of the amount merged from                                  
                  plan 2 to plan 1 during 1986.  This concession was                                       
                  accepted without review or analysis of the underlying                                    
                  substantive issues related to the concession.                                            






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