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Under section 408(d)(3)(A), petitioner had until July 31,
2000, to effectuate a tax-free rollover of the entire amount he
received from the distribution of May 31, 2000. Even though
petitioner agrees that he received and failed to roll over the
cash balance and OppenheimerFunds investment, he asserts that he
did roll over the Allen’s Creek note, or at least that he
attempted to. He testified that he signed papers with Mr. Butler
authorizing a rollover into an IRA administered by Genesis.
Unfortunately, petitioner presented nothing other than his own
testimony, which is most unclear, that any rollover occurred on
or before July 31, 2000. As no IRA for petitioner’s benefit with
Genesis appears to exist, the 60-day exception to section
408(d)(1) cannot apply to this distribution.
Petitioner further alleges that his Allen’s Creek note was
misappropriated by Mr. Butler. An alleged misappropriation of
funds still does not qualify as a tax-free rollover, and there is
no exception or waiver of the 60-day rollover time period in
cases of fraud or embezzlement.4 Accordingly, as provided by
section 408(d)(1), the entire $4,921 of the May 31, 2000, IRA
distribution, which includes the Allen’s Creek note, is
includable in petitioner’s 2000 gross income under section 72.
4 Petitioner has not disputed the fair market value of
the Allen’s Creek note at the time of the distribution of the
note from the IRA. It would appear that if there was a theft,
the theft occurred after the distribution.
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Last modified: May 25, 2011