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Instead petitioners used a portion of the withdrawn funds to
purchase a new home in Denver, Colorado, and invested the
remainder in the stock market.
Petitioners received a Form 1099-R, Distributions From
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc., for each of the withdrawals. Both
Forms 1099-R listed the amount of the gross distribution in box 1
as the taxable amount in box 2a. The “Total distribution” box in
2b was checked, and the “Taxable amount not determined” box was
left blank on both Forms 1099-R.
Petitioners filed a joint individual income tax return for
2000. They reported total pension and annuity distributions of
$175,450, but they only reported $89,743 of that amount as
taxable income.2 Petitioners also claimed an IRA deduction of
$34,233 and a refund of $11,586. Petitioners testified that they
had attached a note to their 2000 return requesting that the
Internal Revenue Service (IRS) review their return, correct any
reporting errors, and recalculate their tax liability as
necessary.3
2Although the parties stipulated that petitioners reported
$89,289 as the amount of taxable income, petitioners’ tax return
shows this amount to be $89,743.
3As of the date of trial, respondent had not located the
note, and petitioners did not retain a copy of it.
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