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funds which are subject to a taxpayer’s unfettered command and
which he is free to enjoy at his option are constructively
received by him whether he sees fit to enjoy them or not.” Id.
at 592. Specifically, under Louisiana law, petitioner was not a
holder of and could not negotiate the check. La. Rev. Stat. Ann.
secs. 10:1-201 (defining a holder); 10:3-201 (defining
negotiation); 10:3-301 (defining an individual entitled to
enforce an instrument) (West 1993). Petitioner’s actions as a
conduit for the IRA trustee in these limited circumstances
violated no prohibition regarding a taxpayer’s relationship to
his IRA and, therefore, did not result in a distribution.
Respondent argues that this transaction is controlled by
Lemishow v. Commissioner, 110 T.C. 110 (1998). In Lemishow the
taxpayer made withdrawals from retirement accounts, invested the
distributions in stock, and contributed the stock to a new IRA.
We held that this transaction could not qualify as a tax-free
rollover of qualified plan assets because the character of the
property transferred to the new IRA was different from the
character of the property distributed to the taxpayer, and,
therefore, under section 402(c)(1) the transaction did not
qualify as a rollover. Id. at 113. But, in this case,
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Last modified: May 25, 2011