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nontaxable on his tax return. We hold it does. Unless otherwise
indicated, section references are to applicable versions of the
Internal Revenue Code. Rule references are to the Tax Court
Rules of Practice and Procedure.
FINDINGS OF FACT
Many facts were stipulated, and we incorporate by this
reference the parties’ stipulation of facts and the accompanying
exhibits. Mr. Anderson and Martha L. Anderson (Mrs. Anderson)
are husband and wife, and they filed a joint 1997 Federal income
tax return. They resided in Fort Worth, Texas, when their
petition was filed with the Court. Mr. Anderson was born in 1932
and holds a bachelor’s degree in commerce.
In 1993, Mr. Anderson retired from General Dynamics. In
June 1994, Mr. Anderson rolled over $217,847.83 of his funds in
the General Dynamics Salaried Employee Plan to an IRA account
with National Financial Services Corporation (NFSC). Before
establishing the account with NFSC, an NFSC portfolio
representative explained to Mr. Kelly the significance of an IRA,
including its investment options. Mr. Kelly’s application for
the account with NFSC stated at the top that it was an “IRA
Account Application”.
On June 2, 1997, Mr. Anderson closed his IRA account with
NFSC by withdrawing the balance of $200,688.97; he closed the
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