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one might reasonably expect her to have taken in order to convert
her IRA's into non-IRA accounts by August 15, 1990, and was
entitled to have her instructions carried out immediately.
We also note that events independent of petitioner's
conversation with the First American employee support
petitioners' assumption that the conversion of petitioner's First
American IRA's could be effected by telephone. First,
petitioners were able to withdraw and receive the account balance
from the Fidelity IRA by telephone. Second, petitioners
frequently observed advertisements encouraging customers to
conduct their banking telephonically. Third, the terms and
conditions governing petitioner's First American IRA's did not
set forth a procedure for closing an IRA, and thus did not put
petitioner on notice that she could not close her First American
IRA's by telephone.
In reasonably relying on the First American employee's
representation, petitioner did everything that she could
reasonably be expected to do in order to comply with the relief
provision of section 408(d)(4). We therefore hold that
petitioners are not precluded from relief under that section
because of the error made by the First American employee.
Accordingly, petitioners are not liable for income tax on the
distribution of the excess contributions from petitioner's First
American IRA's in 1990.
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