- 20 - preclude the estate from recognizing income in 1940; i.e., when the funds were deposited in the account. Id. at 266, 267. We believe that the same analysis should apply in these cases. In Estate of Fairbanks v. Commissioner, supra, the bank account was established by the payor Sun Oil Co., not by either of the joint signatories. However, we believe that the relevant holding in that case was that the taxpayer estate did not have the type of unfettered control which would trigger income recognition. Petitioner here did not have exclusive control over the funds until 1986. In fact, any action required the signature of a vice president of the Plan’s trustee, First American, who had a fiduciary duty to act in the Plan’s best interests, which we believe the Plan’s trustee recognized in his dealings with the Plan. See generally Friend v. Sanwa Bank California, 35 F.3d 466 (9th Cir. 1994); see also Winger’s Dept. Store, Inc. v. Commissioner, 82 T.C. 869, 884 (1984). Petitioner could not unilaterally remove the funds in the Republic Bank account. This was a substantial restriction on petitioner’s ability to withdraw funds, and it prevented petitioner from having constructively received the distribution in 1985. Instead, petitioner was taxable on the $771,000 for the 1986 tax year. Substantial Understatement Respondent also determined that petitioner is liable for the addition to tax for substantial understatement of income tax in 1985 or 1986. Income tax is substantially understated if, in anyPage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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