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expenses. Sec. 72(t)(2)(F); sec. 1.408A-6, Q&A-1(b), Income Tax
Regs.
The Forms 1099-R do not list petitioners’ contributions to
their Roth IRAs and indicate that no known exception excluded the
distributions from gross income. The 30-day letter, which was
issued in August 2005, asked petitioners to establish that the
distributions were nontaxable and to provide Forms 8606, which
petitioners agreed to do. When petitioners failed to provide the
Forms 8606 by January 2006, respondent was substantially
justified in issuing the notice of deficiency. See Uddo v.
Commissioner, T.C. Memo. 1998-276; sec. 301.7430-5(c)(1) and (h),
Example 1, Proced. & Admin. Regs.
Petitioners concede they had not yet provided the Forms 8606
when the notice was issued. But they contend that other
documents in respondent’s possession, such as prior years’ tax
returns and prior years’ Forms 5498, IRA Contribution
Information,5 “showed that the distributions were qualified
distributions, not income.” Petitioners are incorrect.
Section 6001 requires a taxpayer to maintain records that
are sufficient to enable the Commissioner to determine his or her
correct tax liability. See also sec. 1.6001-1(a), Income Tax
5 A Form 5498, IRA Contribution Information, is issued by a
third party that maintains a Roth IRA for the taxpayer. As its
name suggests, the Form 5498 shows the amount of contributions
the taxpayer made during the taxable year to the Roth IRA.
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Last modified: November 10, 2007