Thank You For Submiting Feedback!
United States Tax Court
September 24, 2002, Filed
DAWSON, Judge: This case was assigned to Special Trial Judge Carleton D. Powell pursuant to section 7443A(b)(3) and Rules 180, 181, and 182. 1 [**2] The Court agrees with and adopts the opinion of the Special Trial Judge, which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
POWELL, Special Trial Judge: Respondent determined a deficiency of $ 17,393 and a section 6662 accuracy-related penalty of $ 3,479 in petitioner's 1998 Federal income tax. After concessions, 2 the issue is whether a transaction involving the purchase of stock in S.K./R.M.A., Inc. (S.K.), 3 constituted a distribution to petitioner from his individual retirement account (IRA). At the time the petition was filed, petitioner resided in New Orleans, Louisiana.
[*136] [**3] Background
This case was submitted fully stipulated under Rule 122, and the applicable facts may be summarized as follows. 4 During 1998 petitioner maintained a self-directed IRA. Pershing, a division of Donaldson, Lufkin & Jenrette Securities Corp., was the custodian of the IRA, and Hibernia Investments, L.L.C. (Hibernia), was the investment adviser.
Petitioner could request that the funds of the IRA be invested in specific assets (specific mutual funds, stocks, etc.). These requests were typically made by telephone to Hibernia, and Pershing, as custodian, would then execute the requests. In September 1998, petitioner requested that his IRA invest $ 40,000 in the stock of S.K. An employee of Hibernia informed petitioner that although S.K. stock could be held as an asset of the IRA, Pershing would not purchase the stock on behalf [**4] of the IRA because the stock was not publicly traded. Subsequently, petitioner contacted S.K. directly and was informed that its stock was available for purchase directly from S.K. Petitioner and Hibernia determined that the IRA could invest in S.K. if Pershing issued a check payable directly to S.K. Hibernia furnished petitioner with a "Distribution Request Form" from Pershing to facilitate the issuance of the check. The form stated that "(Use of this form will result in a distribution reportable to the IRS [Internal Revenue Service] on Form 1099-R [Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.])."
On September 14, 1998, petitioner executed the form requesting Pershing to issue a $ 40,000 check made payable to S.K. and instructed that the check constituted an investment of his IRA assets. Pershing sent petitioner a confirmation letter indicating that a distribution of $ 40,000 had occurred on September 15, 1998, and instructed petitioner to contact Pershing if he had any questions. On the same day, Pershing issued the $ 40,000 check payable to S.K. drawn on petitioner's IRA account. Pershing sent the check to petitioner. [**5] Petitioner did not negotiate the check. Instead, petitioner forwarded the check directly to S.K.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
119 T.C. 135 *; 2002 U.S. Tax Ct. LEXIS 43 **; 119 T.C. No. 6
ROBERT ANCIRA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Disposition: [**1] Decision will be entered for taxpayer.
stock, certificate, rollover, distributed, retirement, conduit, invest
Tax Law, Retirement Plans, Qualified Retirement Plans, Distributions From Plans, Tax Accounting, Individual Retirement Plans, Individuals, Annuities & Life Insurance, General Overview, Business & Corporate Law, Agency Relationships, Agents Distinguished, Special Agents, Pensions & Benefits Law, Defined Contribution Plans, Plan Types, Individual Retirement Accounts, Federal Income Tax Computation, Gross Income, Taxable Income, Commercial Law (UCC), Negotiable Instruments (Article 3), Enforcement, General Provisions (Article 1), Definitions & Interpretation, Holders, Indorsements, Negotiations & Transfers, Negotiation, Mergers, Rollovers & Vesting