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take care of Mr. Hall, and Mr. and Mrs. Hall were still legally
married.
For the taxable year 1988, Mr. and Mrs. Hall filed a joint
Federal income tax return. They reported a distribution in the
amount of $1,027,229 on line 17a of their return and stated that
no portion of the distribution was includable in income. The
return was signed by both Mr. and Mrs. Hall. Before signing the
return, Mrs. Hall briefly reviewed the first 2 pages of the
return. She noticed the $1,027,229 entry on line 17a, but she
did not question the entry.
Mrs. Hall knew that a large distribution was made from the
Plan to Mr. Hall during 1988. Of the cash distributed to Mr.
Hall, $474,768.81 was transferred from the pension trust account
to a newly opened bank account in 1988. The new account was held
jointly by Mr. and Mrs. Hall. Both Mr. and Mrs. Hall executed
the deposit agreement for the account. In addition, a
certificate of deposit held by the Plan was redeemed and the
proceeds used to purchase a money market certificate in the
amount of $125,331.63 held jointly by Mr. and Mrs. Hall. The
balance of the property distributed to Mr. Hall appears to have
consisted of real property.
OPINION
Section 105(a) provides generally that amounts received by
an employee through accident or health insurance for personal
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Last modified: May 25, 2011