Tax Ct. did not err in granting taxpayer’s motion for summary judgment in taxpayer’s action challenging IRS’s $13,538 assessment, where IRS believed that taxpayer possessed $50,000 distribution of his IRA funds, under circumstances where taxpayer initiated wire transfer of $50,000 from his IRA account directly to issuer of stock for purchase of said stock. Taxpayer never physically received any cash from his IRA account during instant transaction, and Ct. rejected IRS claim that taxpayer constructively received said cash, where: (1) taxpayer was never in possession of stock share certificate or had any control over said shares; and (2) share certificate was issued in name of taxpayer’s IRA account, as opposed to taxpayer’s own name. Fact that taxpayer directed broker to wire funds from his IRA account to issuer of stock did not require different result, since: (1) taxpayer did not direct stock to third party, but bought stock himself, which constituted permissible IRA transaction; and (2) record suggested that taxpayer purchased stock to be held in his IRA account.
Federal 7th Circuit Court
Civil Court
Income Tax