- 19 -
45 B.T.A. 1073 (1941). Moreover, we think that the estate's
position results in an impermissible deferral of tax on the
distributions. Under the estate's approach, so long as the
temporary administrator held the distributions, there was no tax
to pay on the principal, neither by the estate nor by anyone
else. But these funds, upon receipt by him, were immediately
available to satisfy the estate's debts and expenses. No
restriction was placed on the estate's use and enjoyment of these
funds that would warrant a postponement of the tax. Cf. Grimm v.
Commissioner, 894 F.2d 1165, 1169 (10th Cir. 1990), affg. 89 T.C.
747 (1987).7 We therefore find that, for Federal tax purposes,
substantial restrictions and/or limitations were not placed on
the use of the distributed funds.
For the aforementioned reasons, we sustain respondent's
determination and hold that the 1988 and 1989 fund transfers from
the Plan and Trust to the temporary administrator were includable
7 We also note that the estate's failure to report the
distributions as income in the years of receipt by the temporary
administrator is inconsistent with its treatment of income
generated from the distributions and its report of a substantial
portion of the distributions as income in the years the funds
were used to satisfy the estate's liabilities. In 1988 and 1989,
the estate filed tax returns reporting interest income derived
from the pension funds. In 1990 and 1991, the estate reported
the funds themselves as income to the extent that they were used
to pay the estate's expenses. Consistency, however misplaced,
dictates that the estate would not report any of the
distributions or income derived thereon as income until there was
a subsequent distribution to the ultimate beneficiary.
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