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liability for the 10-percent penalty. They claim detrimental
reliance in that had they known they would owe such tax,
petitioner would have paid off the pledge to Georgetown
University Law Center in full in 1999, and, in so doing,
petitioners could have taken an itemized charitable contribution
deduction for the $25,000 gift to Georgetown. Instead, they
claimed the standard deduction on their 1999 return and lost the
tax benefits of a charitable contribution they could have
realized.
A more complete reading of the applicable instructions
undercuts petitioners’ argument. The instructions clearly state
that they apply to rollovers from one qualified plan to another
qualified plan.14 Petitioners’ SFB and Glenbrook nonqualified
14 The instructions read, in pertinent part:
Rollovers
A rollover is a tax-free distribution of cash or other
assets from one retirement plan that is contributed to
another plan. Use lines 16a and 16b to report a rollover,
including a direct rollover, from one qualified employer’s
plan to another or to an IRA or SEP.
Enter on line 16a the total distribution before income
tax or other deductions were withheld. This amount should
be shown in box 1 of Form 1099-R. From the total on line
16a, subtract any contributions (usually shown in box 5)
that were taxable to you when made. From that result,
subtract the amount that was rolled over either directly or
within 60 days of receiving the distribution. Enter the
remaining amount, even if zero, on line 16b. Also, put
“Rollover” next to line 16b.
(continued...)
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