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effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Respondent determined a $6,391 deficiency in petitioners’
2003 Federal income tax and a $1,278 accuracy-related penalty
pursuant to section 6662(a).1 The issues for decision are: (1)
Whether petitioners’ gross income includes annuity proceeds of
$53,885 and related interest income of $1,136, and (2) whether
petitioners are liable for the accuracy-related penalty.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits, as well as
additional exhibits introduced at trial, are incorporated herein
by this reference. At the time the petition was filed,
petitioners resided in Zephyrhills, Florida. References to
petitioner in the singular are to Ernestina Moracen.
Petitioner’s stepmother, Celia Knight, died in July 2003.
Before her death, Mrs. Knight had purchased an annuity contract
from Travelers Life & Annuity (Travelers). Petitioner was a
named beneficiary of the annuity contract, as was Mrs. Knight’s
sister, Gladys Becquer. Petitioner’s father, Pedro Knight, was
not named as a beneficiary.
After Mrs. Knight died, Luis Falcon was appointed executor
of the estate. Travelers issued two checks to petitioner
1 All amounts are rounded to the nearest dollar.
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Last modified: November 10, 2007