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The IRS refund did not include the $23,477 amount from Mr.
Russell's IRA account.
Respondent sent a notice of deficiency for the 1991 and 1992
tax years to petitioners. Respondent determined that the levy on
Mr. Russell's IRA account resulted in a constructive distribution
to petitioners of taxable income in the amount of $23,477 for the
1991 tax year. Respondent further determined that petitioners
earned interest income for the 1991 and 1992 tax years in the
amounts of $77 and $56, respectively, which they failed to
report, and that petitioners had earned unreported wage income in
the amount of $10,000 for the 1992 tax year. Respondent also
determined an addition to tax under section 6651(a)(1) for the
1991 and 1992 tax years.
In their petition, petitioners contested only the inclusion
of $23,477 in income for 1991 and the addition to tax under
section 6651(a)(1) on that amount. They contended that the levy
did not constitute a constructive distribution to petitioners of
taxable income. Petitioners did not seek a redetermination of
the deficiency and addition to tax for the 1992 tax year.
Mr. Russell died on June 21, 1997. Petitioner Lavada S.
Russell qualified as executrix of Mr. Russell's estate on July
21, 1997. Because of petitioner Lavada S. Russell's financial
condition, petitioners' counsel agreed that they would limit
their fees to $2,000 for the period beginning on September 1,
1997, and ending on the resolution of petitioners' case in the
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