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53 but instead wrote in the space: “See note attached.” Two
pages of handwritten notes were attached to the return. The
first page referenced line 53 and stated: “The required 10% IRS
withholding was made as to Glenbrook Life & Annuity-–see Form
1099-R attached.” The second page referenced the Trust and
stated: “See attached Form 1099-R for Southern Farm Bureau Life
Insurance Company–10% IRS withholding occurred-–These funds were
placed in the Trust and/or were used for the Trust purposes.”
Petitioner believed he was following the instructions to Form
1040 in not listing the taxable portions of the distributions as
income on line 16 (IRA distributions) and the 10-percent tax for
early distributions on line 53 (tax on IRAs, etc.). He believed
that the attached notes would satisfy those two lines on the
return. He believed that placing a portion of the proceeds from
the Southern Farm Bureau distribution into a trust constituted a
rollover, and that, if he were in error in that assumption, the
IRS would correct it.
On April 25, 2000, petitioner signed a notarized personal
financial statement for 1999, which he filed with the Texas
Ethics Commission as required of him as a member of the Texas
Lottery Commission. He listed on that report the Southern Farm
Bureau and Glenbrook distributions, including the gross and
taxable portions of the distributions.
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