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totaling $415,266. Of that amount, $414,130 represented proceeds
from the annuity contract, while $1,136 represented interest that
accrued before the proceeds were distributed. At Mr. Falcon’s
behest, each check was deposited into a joint bank account in the
names of petitioner and Ms. Becquer. Petitioner and Ms. Becquer
had signature authority over the joint account.2 In August 2003,
petitioner wrote a check from the account to her father in the
amount of $415,000.
In 2004, Travelers issued petitioner a Form 1099-R,
Distributions from Pensions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc., listing a gross
distribution of $414,130 and a taxable amount of $53,886.
Travelers also issued petitioner a Form 1099-INT, Interest
Income, listing taxable interest income of $1,136. Petitioners
did not report any portion of the annuity proceeds or interest
income on their joint 2003 tax return.
Respondent issued petitioners a notice of deficiency in
August 2005. Respondent determined that petitioners must include
in gross income $53,885 of the annuity proceeds and $1,136 of
interest income. Respondent also determined an accuracy-related
2 Ms. Becquer separately received and deposited into the
joint account proceeds from Mrs. Knight’s annuity contract.
Those proceeds are not at issue in this case.
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Last modified: November 10, 2007