James E. Copley and Cynthia R. Copley - Page 4

          or about October 31, 1990, petitioner withdrew the entire balance           
          of his account ($16,831.81) and closed his Fidelity IRA.  On                
          October 31, 1990, petitioner deposited the funds withdrawn into a           
          personal checking account with City National Bank.  At the time             
          of the withdrawal, petitioner was 41 years old.                             
               Petitioner argues that the amount withdrawn from the                   
          Fidelity IRA is not currently taxable because Fidelity withheld             
          the tax prior to disbursing the funds.  In support thereof,                 
          petitioner points to the difference between the amount deposited            
          in the IRA ($18,446.72) and the balance of the account at the               
          time of the withdrawal ($16,831.81).  Petitioner claims that this           
          amount ($1,614.91) represents tax withheld.  Petitioner offers no           
          documentation to support his argument.                                      
               Under section 402(a)(1), a distribution from a qualified               
          employee's trust is taxable to the distributee in the year of               
          distribution.  Section 402(a)(5)(A) provides an exception to the            
          general rule for certain "rollovers" by the employee; namely,               
          where the balance to the credit of the employee in a qualified              
          trust is paid to him, and the employee transfers any portion of             
          the distribution to "an eligible retirement plan" within 60 days            
          of receipt, then the amount so distributed shall not be included            
          in gross income.  Sec. 402(a)(5)(A), (C).                                   
               Respondent does not dispute that the deposit of petitioner's           
          lump-sum distribution into the Fidelity IRA qualifies as a tax-             
          free rollover.  However, respondent contends that petitioner's              

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011