- 13 -
before October 31, 2000. Petitioner merely endorsed the check
over to Southern Farm Bureau.
In the notice of deficiency and accompanying explanations,
respondent determined that petitioners failed to include on their
original and amended returns the taxable annuity proceeds of
$61,548.12 Respondent adhered to the $6,154.94 penalty that
petitioners self-assessed on their amended return for the
$61,549.38 taxable portion of early distributions by Southern
Farm Bureau and Glenbrook. Respondent included the previously
unreported SFB and Glenbrook distributions as gross income,
determined that self-employment tax was due, and allowed a
corresponding deduction for one-half of such tax. Respondent
reduced petitioners’ exemptions deduction under section 151(d)
because of adjusted gross income greater than $189,950. Finally,
respondent determined that a 20-percent accuracy-related penalty
was due for substantial understatement of tax under section
6662(a).
The first issue is whether petitioners received taxable
annuity proceeds of $61,548. Section 61(a)(9) provides that
12 The combined amount of taxable annuity proceeds
reported on Forms 1099-R by Southern Farm Bureau and Glenbrook is
actually $61,549.38. Respondent admitted a $1.38 error in
petitioners’ favor on the amount of annuity proceeds includable
as income and did not seek an increased deficiency.
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011