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proving that he acted with reasonable cause and in good faith.
Higbee v. Commissioner, 116 T.C. 438, 446-448 (2001).
The facts and circumstances of this case do not support
imposition of the accuracy-related penalty. In response to
petitioner’s inquiry, the bank issued a corrected Form 1099-R
reporting a gross distribution of $0 and a taxable distribution
of $0. The bank prepared a “Retirement Account Correction
Worksheet”, explaining that it issued the corrected Form 1099-R
because the transaction should have been a trustee transfer to an
AEL IRA. Ms. Koble prepared and signed a new “Traditional IRA
Withdrawal Statement” which was intended to be retroactive to
August 1998, and it indicated that there should have been a
trustee-to-trustee transfer of funds from petitioner’s IRA to an
AEL annuity. The documents indicate that Ms. Koble and the bank
felt that they had mistakenly characterized the transactions and
that they were attempting to correct their mistake.
Additionally, the parties agree that Ms. Koble would have
testified that the bank should have sent a corrected Form 1099-R
to respondent after it prepared the corrected form and that the
bank did send a corrected Form 1099-R to respondent in February
2002. Although the evidence in the record indicates that the
funds are still in the nonqualified annuity, we believe that
petitioner had reasonable cause and acted in good faith in not
reporting the distribution on his 1998 return on the basis of his
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