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to the loan to Stephanie and David. Stephanie would be required
to pay a 5-percent excise tax and interest totaling $14,381.
Respondent informed petitioner that no closing agreement
would be executed if he accepted the terms of either offer.
According to the examining agent, it was not the practice of
respondent to use closing agreements to resolve profit-sharing
plan disputes, except in cases of fraud and when a case is
selected for review. A closing agreement would not be used to
resolve the dispute with petitioner because it did not fall
within either exception. The dispute would be resolved when
petitioner performed according to the terms of the agreement.
Petitioner agreed to a deemed distribution pursuant to the
terms offered by respondent. On January 1, 1995, as the profit-
sharing plan’s fiduciary, petitioner assigned Stephanie and
David’s note, secured by the second deed of trust to the
Atascadero property, to himself as beneficiary of the plan.
Petitioner was 58 years old at the time of the distribution.
In the beginning of 1995, Stephanie accepted a job in
Dallas, Texas. Stephanie lived in a rented apartment in Texas
for more than half of 1995, continued to make the mortgage
payments on her home in Oakland where her mother resided, and
made payments on the Great Western loan on the Atascadero
property. The monthly payments on the Great Western loan were
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Last modified: May 25, 2011