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made by petitioner as trustee of the plan. In June 1987, on
petitioner’s behalf and at his direction, the plan invested
$25,972.82 in corporate securities. During 1990, the plan was
terminated and the proceeds of the Kidder account were
transferred (rolled) into an individual retirement account at
Daking Securities Corporation (the IRA). The IRA was established
for the benefit of petitioner, who as its custodian, directed how
IRA funds were to be invested. Petitioners did not include any
of the proceeds rolled over from the Kidder account to the IRA in
their 1990 income.
During 1996, petitioner, who was 49 years old as of the
close of that year, received distributions totaling $21,700 from
the IRA (the IRA distributions). Petitioners did not include any
of the IRA distributions in the income they reported on their
1996 Federal income tax return, which includes a Schedule D,
Capital Gains and Losses. Nothing on the return suggests that
any of the transactions listed on the Schedule D relate to
investments of the plan or the IRA.
In the notice of deficiency, respondent determined that the
IRA distributions received by petitioner in 1996 are includable
in petitioners’ income for that year. Other determinations made
in the notice of deficiency are not in dispute.
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Last modified: May 25, 2011