- 4 -
continued through the taxable year in issue.
B. Petitioner’s Investment Strategy
Petitioner has maintained several IRAs with institutions
such as Fidelity Investments. As relevant herein, in 1997
petitioner became dissatisfied with the 8-percent return on his
IRA deposits with Fidelity Investments and, therefore, petitioner
orchestrated an arrangement between himself and Marlene Hope,
Inc. “to get out of Fidelity” in order to increase his investment
return. At trial, petitioner described his investment strategy
as follows:
Years back I had been doing some real estate, buying
and selling and mortgaging. I figured that’s the only
place I can get a job and go back to work. * * *
I came across what I thought was a good deal, a single
family house costing $52,450, and I found a tenant, a
Section 8[3] tenant, who needed five bedrooms. She
would gladly occupy the house, providing she got
approval from the Section 8 people in Providence. This
went through, and ultimately I bought the house for
$52,250. I gave a $2,600 deposit, and the balance of
$50,000 or thereabouts was to come from Fidelity.
I spoke to Fidelity about withdrawing this money. They
said as long as it doesn’t come into your hands you
could roll it over. I didn’t want to pay taxes on some
$50,000 in the state I was in then; have to pay taxes
on it and then not have it for the future. I relied on
them. The deal went through.
3 “Section 8” is a reference to sec. 8 of the United States
Housing Authority Act of 1937, ch. 896, 80 Stat. 888, as amended
by the Housing and Community Development Act of 1974, Pub. L. 93-
383, sec. 201(a), 88 Stat. 662, which is codified as 42 U.S.C.
sec. 1437f (2000). Generally, “Section 8” refers to assisted
public housing.
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