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While the considerations in Diamond may have been different,
we believe that our observation is applicable here. From our
perspective, the soundest view of this case is that petitioner
acted as a conduit for Pershing by both arranging the stock
purchase and ensuring that the check was delivered to S.K. The
IRA was a custodial account, and Pershing was the trustee
thereof, as well as the holder of the assets in the account.
Sec. 408(h); sec. 1.408-2(d), Income Tax Regs. Petitioner
exercised his right, under the IRA agreement, to direct
investments of the IRA assets by requesting that Pershing invest
a portion of his IRA assets in S.K. stock. Because of Pershing’s
policy not to purchase securities that are not publicly traded,
petitioner acted as a conduit for Pershing in arranging the
investment. The check was payable to and negotiated by S.K. The
stock was issued to the IRA account.
Petitioner’s actions as the IRA trustee’s agent consisted of
insuring that the check was delivered to S.K. We are not aware
of any provisions of the Internal Revenue Code, applicable
regulations, or case law that prohibit a taxpayer from acting as
a conduit for an IRA trustee under the circumstances presented
here. We further note that it cannot be argued cogently that
petitioner was in constructive receipt of the assets represented
by the transaction. See Estate of Brooks v. Commissioner, 50
T.C. 585 (1968). “Its essence [of constructive receipt] is that
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