106 T.C. No. 20
UNITED STATES TAX COURT
ALFRED E. GALLADE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 791-94, 792-94. Filed May 28, 1996.
C, P’s wholly owned corporation, operated a
pension plan in which P participated. Because of C’s
poor financial disposition, P executed a “waiver”, to
assign his fully vested, accrued benefits to C. Due to
the waiver, P did not report any taxable distribution.
R determined that P’s waiver was an impermissible
attempt to assign or alienate his benefits in violation
of sec. 206(d)(1) of ERISA and sec. 401(a)(13), I.R.C.
1. Held: P received a taxable distribution.
2. Held, further, the distribution was received
by P in 1986.
3. Held, further, R abused her discretion by
failing to waive the penalty for substantial
understatement of income tax.
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