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During 2000, the money invested in petitioner’s IRA earned
mutual fund dividends in the amount of $141.27. During that
year, petitioner requested distributions of $10,000 from his IRA.
By the end of 2000, the value of petitioner’s IRA was zero.
Wells Fargo Investments, LLC, later issued a Form 1099-R to
petitioners reporting gross distributions of $10,000 from
petitioner’s IRA during the year 2000. The record of this case
suggests that Wells Fargo Bank acquired Norwest, but it does not
say when the acquisition took place.
Petitioners filed their Federal income tax return for 1998
on October 18, 2000. The return had been prepared by Arthur
Anderson. Consistent with the Form 1099-R issued to petitioners
by Wells Fargo Bank, and the Form 5498, IRA Contribution
Information, issued by Norwest Bank Minnesota, N.A., petitioners’
1998 return reports total pensions and annuities of $467,817.
Petitioners’ 1998 return reports that the taxable amount of the
distribution is “NONE”. Petitioners’ 1998 return also reports
income tax withholding of $51. Finally, petitioners’ 1998 return
reports none of the dividend income earned by petitioners’ IRA
during 1998 in the aggregate amount of $1,832.25.
In passing, we note that by October 18, 2000, when
petitioners filed their return for 1998, and reported that "NONE"
of the ESOP distribution was taxable, they had already withdrawn
most, if not all, of the money from the IRA. Stated differently,
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