- 3 -
company. He was terminated from that position in April 2002; he
did not secure full-time employment again until October 2002,
making about $9,500 per month. As of the time of trial, Richard
was earning about $10,000 per month; i.e., about the same as
before his 1997 job change.
After his 1997 job change, Richard began liquidating his
Individual Retirement Account (IRA). Between 1998 and 2000, he
took out $382,577 in early distributions.2 He used these IRA
distributions partly to cover living expenses and partly for
things such as making payments of about $700 per month on a
recreational boat.3 In 1999, petitioners refinanced their
residence and used the $37,500 proceeds principally to pay off
credit card debts.
1999 and 2000 Federal Tax Returns
Petitioners’ 1999 Federal income tax return was due, after
extensions, on October 15, 2000; petitioners filed it on
October 24, 2000. Petitioners’ 2000 Federal income tax return
was due, after extensions, on October 15, 2001; petitioners filed
it on November 14, 2001.
2 Richard withdrew $198,107 from his IRA in 1998, $107,735
in 1999, and $76,735 in 2000. He elected to have Federal income
taxes withheld (in the amounts of $48,207 and $8,300,
respectively) from the 1998 and 1999 withdrawals but not from the
2000 withdrawal.
3 Richard testified that he had continued making payments on
the boat until some 3 months before the trial in this case.
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