Robert C. and Carol S. Jacobsen - Page 12

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          account at the time the withdrawal was made, and that petitioners           
          did not employ a consistent interest rate in their calculations.            
          We agree with respondent and conclude that petitioners have not             
          shown that Mr. Jacobsen’s distribution qualifies for an exception           
          to the tax imposed under section 72(t).                                     
               Petitioners appear to have had a difficult year in 1997.               
          However, throughout the proceedings in this case, Mr. Jacobsen              
          made unwarranted accusations against respondent’s representatives           
          and complained that respondent’s agents never explained exactly             
          what would be required to substantiate petitioners’ expenses.               
          Mr. Jacobsen acknowledged that, in an earlier case in this Court,           
          docket No. 18060-93, involving petitioners’ liability for 1991,             
          business expenses were disallowed in a bench opinion and that an            
          appeal to the Court of Appeals for the Ninth Circuit was                    
          unsuccessful.  See Jacobsen v. Commissioner, 103 F.3d 138 (9th              
          Cir. 1996), affg. an Oral Opinion of this Court.  Thus, by the              
          time their return was filed for 1997, petitioners were on notice            
          that they needed to substantiate better the deductions claimed on           
          their returns.  Our sympathy toward their personal situation does           
          not mean that we can allow deductions that have not been                    
          substantiated in accordance with the legal requirements.                    

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