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originally anticipated and budgeted. In part to finance Andrea’s
education, he requested and received sizeable distributions from
the Glenbrook nonqualified annuity and the SFB nonqualified
annuity during 1999. He knew that portions of these
distributions would be taxable and attempted to anticipate his
tax obligations and Andrea’s future expenses through
withholdings, advance planning, and record keeping. Petitioner
made the decisions regarding the distributions himself and did
not seek or receive tax advice regarding them.
On January 21, 1999, petitioner requested a distribution of
$330,000 from the SFB nonqualified annuity (SFB distribution).
He requested that Southern Farm Bureau withhold 10 percent of the
gross distribution, or $33,000, for Federal income taxes.
Petitioner explained why he requested that the withholding be
calculated from the gross amount of the distribution, rather than
from the taxable portion, as he testified:
to be safe. I knew enough to know that only a certain
amount of it was going to be taxable * * *. And I said,
Well, $33,000 ought to cover it * * *. I was getting a
certain amount of money in the IRS’ hands, in case I’m wrong
about this whole thing.
On January 30, 1999, Southern Farm Bureau issued a check to
petitioner in the net amount of $297,000, after withholding
$33,000 income taxes. With these funds, petitioner purchased a
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