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Procedure. After concessions by both parties, which will be
given effect in the Rule 155 computation, the issues for decision
for taxable year 1988 are:
(1) Whether distributions received by petitioners in the
amount of $74,813 from their defined contribution profit-sharing
plan are includable in gross income as determined by respondent.
We hold that they are.
(2) Whether respondent abused her discretion in failing to
offer to enter into a closing agreement with petitioner Orvil
Weddel’s employer, in accordance with the Internal Revenue
Service Employee Plans Closing Agreements Pilot Program, in order
to avoid plan disqualification under section 401(a). We hold
that respondent did not abuse her discretion.
Petitioners resided in Amarillo, Texas, at the time the
petition was filed in the instant case. Petitioners’ joint
Federal income tax return for taxable year 1988 was timely filed.
Mr. Weddel is employed as a machinery operator at Ace
Machine Co. (Ace), a Texas corporation. Mr. Weddel began working
for Ace in 1972. Mrs. Weddel was employed by Ace; however, the
dates of her employment are not clear in the record. Ace is
involved in the business of oilfield welding. On June 1, 1977,
Ace adopted a defined contribution profit-sharing plan (Plan).
The Plan received a favorable determination letter from the
Internal Revenue Service (IRS) on November 11, 1977. Mr. Weddel
was a participant in the Plan. The trustee of the Plan was an
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