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Until August 31, 1987, the P.C. had a fiscal year ending
August 31. However, beginning with the short year ending
December 31, 1987, it changed to a calendar year basis.
The plan was terminated on March 31, 1988, and liquidated as
of December 31, 1988. The P.C. itself was dissolved on October
26, 1988. Upon the plan's liquidation, its assets in the amount
of $1,339,511 were distributed. Of this distribution, $1,168,035
was rolled over to an Individual Retirement Account established
for the benefit of Mr. Souris. The remaining $171,476 was
ineligible to be rolled over, and appears to be attributable to
overfunding the plan over the years due to what turned out to be
erroneous actuarial assumptions. Thus, as stipulated by the
parties, that $171,476 "represented excess Plan assets which
reverted back to the Corporation." The reversion was not
reported by the corporation in its 1988 return. However, in the
1988 joint individual income tax return filed by Mr. Souris and
his wife, the reversion was reported as "other" or
"miscellaneous" income, which was explained in that return as
"Theodore Souris P.C. Pension Plan Reversion".
In the notice of deficiency the Commissioner determined that
"Theodore Souris, P.C. received $171,476 as a taxable reversion
from the Theodore Souris, P.C. Pension Plan and Trust during the
taxable year ended December 31, 1988." The Commissioner
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