Jaime Pena and Verna Ann Pena - Page 2




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                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          Petitioners are husband and wife.  They filed a timely joint                
          Federal income tax return for 1996.  At the time the petition was           
          filed, petitioners resided in Danville, California.  References             
          to petitioner are to Jaime Pena.                                            
               Petitioner is an attorney licensed to practice in                      
          California.  Prior to the year in issue, he was employed as an              
          attorney by Jaime Pena Professional Corp. (the corporation).                
          Effective as of September 1, 1982, for petitioner’s benefit and             
          with petitioner as trustee, the corporation established a defined           
          benefit single-employer plan entitled the Jaime Pena A P.C.                 
          Defined Benefit Plan (the plan).  The plan was a qualified                  
          pension plan within the meaning of section 401(a).1                         
               Over the years, the corporation made contributions to the              
          plan on petitioner’s behalf and claimed deductions for those                
          contributions on its corporate Federal income tax returns.  None            
          of the contributions were includable, or were included in                   
          petitioners’ income for any period.  Petitioner never made any              
          contributions to the plan.                                                  
               The plan maintained a brokerage account with Kidder, Peabody           
          & Company (the Kidder account), but investment decisions were               


               1  Section references are to the Internal Revenue Code, as             
          amended, in effect during the relevant period.                              




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