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an Internal Revenue Service examiner recalculated the taxable
income and prepared a revised Federal tax return for petitioner’s
signature. Neither petitioner nor the examiner signed the
revised tax return on April 2, 1998.
Petitioner filed a delinquent Federal income tax return for
1996 on April 16, 1998, reporting the entire IRA distribution as
income with income tax due of $53,760. Petitioner paid $54,196
toward the tax liability on the same date. Petitioner testified
she had received nothing in writing from the Internal Revenue
Service stating she did not have to file a Federal tax return for
1996 and nothing in writing stating she had no tax liability for
1996. Moreover, petitioner testified she knew the tax-free
nature of the IRA distribution depended on rolling over the
distribution. Even though this conclusion was based on incorrect
advice, at no time was she advised that the IRA distribution was
tax-free without a rollover. Using the incorrect advice,
petitioner rolled over $14,512 of the $177,412 to her own IRA.
On April 29, 1998, petitioner met with Robert Cool (Mr.
Cool) of the Chicago Internal Revenue Service Problem Resolution
Office (Problem Resolution Office) to determine whether the
Federal tax return she filed was correct. During that meeting
petitioner verified that she had rolled $14,512 of the
distribution over into her own IRA. Mr. Cool incorrectly advised
petitioner to file a Form 1040X, Amended U.S. Individual Income
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