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Federal income tax and an addition to tax under section
6651(a)(1) of $4,398 and $660, respectively. The issues are:
(1) Whether a distribution from a retirement plan of $27,389 is
includable in petitioner’s gross income for the 1998 taxable
year; (2) whether petitioner failed to report interest income of
$117 for 1998; and (3) whether petitioner is liable for the
addition to tax under section 6651(a)(1) for the 1998 taxable
year.2 Petitioner resided in Baton Rouge, Louisiana, at the time
the petition was filed.
The facts may be summarized as follows. In October 1998,
petitioner received a distribution from a retirement plan3 of
$30,389.94.4 Some time prior to this, petitioner had opened a
individual retirement account (IRA) and a cash management account
(CMA) with Merrill Lynch. The distribution from the retirement
plan was deposited into the CMA. Petitioner believed that he had
instructed his broker at Merrill Lynch to put the distribution
2 On his 1998 Federal income tax return petitioner reported
taxable income of $12,325 from a teacher’s retirement system.
Respondent concedes that petitioner overstated this income by
$4,124. In the notice of deficiency, respondent determined that
the addition to tax for late filing under sec. 6651(a)(1) was 15
percent of the amount of tax required to be shown on the return.
Respondent concedes that the correct percentage is 5 percent.
3 The precise nature of this retirement plan is not
contained in the record; the parties agree, however, that the
plan is some type of a deferred income retirement program similar
to a sec. 401(k) plan.
4 The amount of the distribution was $30,389.94.
Respondent agrees that only $27,389 was taxable.
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