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Respondent determined a $1,234 deficiency in petitioner’s
2000 Federal income tax. The issues are whether a $4,921
distribution to petitioner from an individual retirement account
(IRA) was includable in his gross income and is subject to the
10-percent additional tax imposed by section 72(t).
At the time the petition was filed, petitioner was a
resident of Deerfield Beach, Florida.
Background
Petitioner was employed by Preferred Respiratory from 1987
through 1999. The company created an IRA for his benefit, and it
was administered by Sterling Trust Company (Sterling Trust). The
IRA had three assets: A cash balance, an OppenheimerFunds
investment, and a participant’s note in a retail shopping center
project called Allen’s Creek.2 During the year at issue these
assets were valued at $96.83, $2,471.23, and $2,353,
respectively. The Allen’s Creek project was managed by BSB
Management Group, Inc., which was owned by Bruce Butler (Mr.
Butler). Petitioner was the only named beneficiary of the IRA.
In a letter dated March 13, 2000, Sterling Trust notified
petitioner of its intention to resign as trustee of his IRA on
April 30, 2000, because it was no longer feasible to administer
accounts holding investments affiliated with Mr. Butler.
2 In the transcript this entity is referred to as Ellen’s
Creek, but all documents refer to this as Allen’s Creek.
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