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deposits or additions to the IRA. Pursuant to a request made by
petitioner on December 17, 2003, the IRA was closed and, taking
into account an interest penalty, petitioner received a
$48,366.65 distribution from the IRA on that date (the IRA
distribution). The IRA distribution is evidenced by a Form 1099-
R, Distributions From Pensions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc., issued to
petitioner by Commerce Bank.
Petitioner deposited $40,000 of the IRA distribution into a
regular time deposit account. The disposition of the remaining
portion of the IRA distribution ($8,366.65) is not known, and
petitioners now agree that at least that amount should have been
included in the income reported on their 2003 return.2
The income reported on petitioners’ timely filed 2003
Federal income tax return, which was prepared by a paid income
tax return preparer, does not include any portion of the IRA
distribution, but it does include a different distribution, in a
much smaller amount, also evidenced by a Form 1099-R.
In the notice of deficiency, respondent increased
petitioners’ income by the amount of the IRA distribution.
Respondent also imposed a section 6662(a) accuracy-related
2 Petitioner mistakenly believed that he used a portion of
the IRA distribution to pay an outstanding Federal income tax
liability from 2000. The record clearly demonstrates that the
payment he recalled was made in 2002, the year before the IRA
distribution.
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Last modified: March 27, 2008