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4975(c)(1)(E) further defines a prohibited transaction as
including any "act by a disqualified person who is a fiduciary[13]
whereby he deals with the income or assets of a plan in his own
interest or for his own account".
We find that it was unreasonable for respondent to maintain
that a prohibited transaction occurred when Worldwide's stock was
acquired by IRA #1. The stock acquired in that transaction was
newly issued--prior to that point in time, Worldwide had no
shares or shareholders. A corporation without shares or
12(...continued)
powers or responsibilities similar to those of officers
or directors), a 10 percent or more shareholder, or a
highly compensated employee (earning 10 percent or more
of the yearly wages of an employer) of a person
described in subparagraph (C), (D), (E), or (G)
* * * [Emphasis added.]
13
In pertinent part, a "fiduciary" is defined by sec.
4975(e)(3) as any person who:
(A) exercises any discretionary authority or
discretionary control respecting management of such
plan or exercises any authority or control respecting
management or disposition of its assets, [or]
* * * * * * *
(C) has any discretionary authority or
discretionary responsibility in the administration of
such plan.
At all relevant times, petitioner maintained and exercised
the right to direct IRA #1's investments. Petitioner, therefore,
was clearly a "fiduciary" with respect to IRA #1 and thereby a
"disqualified person" as defined under sec. 4975(e)(2)(A).
Furthermore, as petitioner was the sole individual for whose
benefit IRA #1 was established, IRA #1 itself was a disqualified
person pursuant to sec. 4975(e)(2)(G)(iii).
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