Hector F. Arias and Carolee Purcell - Page 6




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          and (B) to substantiate items, maintain records, and cooperate              
          fully with respondent’s reasonable requests.                                
               Respondent claims that petitioners cooperated only partially           
          and that petitioners produced only some of the documentary                  
          evidence they possess.  At trial, petitioners admitted that they            
          had not searched every location where relevant documents were               
          likely stored.  We agree with respondent that petitioners have              
          not fully satisfied the requirements of section 7491(a)(2)(A) and           
          (B), and, therefore, petitioners bear the burden of proof.                  
               II. Trust Distribution                                                 
               Petitioners received $170,000 or more in distributions from            
          the trust following Mr. Purcell’s death.  Petitioners acknowledge           
          receipt of funds from the trust but assert that they were not               
          provided sufficient information to determine whether the                    
          distributions constituted gross income.  The distributions from             
          the trust included but were not limited to the proceeds from Mr.            
          Purcell’s life insurance policy, from the sale of his home, from            
          the liquidation of his brokerage account, and from a liquidating            
          distribution from his Roth IRA account.                                     
               In an August 2003 letter to the Purcell sisters, Mr.                   
          Purcell’s estate planning attorney explained:  “Other than IRA,             
          401k [sic], bond interest, and final pay, the amounts you inherit           
          are income tax free.”  The attorney informed the Purcell sisters            
          that the section 401(k) plan maintained by Mr. Purcell’s employer           







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