TAX COURT OPINION

Case: Taria Gordon
Docket Number: 9657-16
Judge: Goeke
Opinion Type: bench
Filed: 04/17/2017
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 TARIA GORDON, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 9657-16. ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the hearing in the above case before Judge Joseph Robert Goeke at Chicago, Illinois on April 6, 2017, containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. April 17, 2017 SERVED Apr 18 2017 Capital Reporting Company 3 1 Bench Opinion by Judge Joseph Robert Goeke 2 April 6, 2017 3 4 5 Taria Gordon v. Commissioner Docket No. 9657-16 THE COURT: The Court has decided to render 6 Oral Findings of Fact and Opinion in this case and 7 8 the following represents the Court's Oral Findings of Fact and Opinion. The Oral Findings of Fact and 9 Opinion shall not be relied upon as precedent in any 10 11 12 13 14 15 16 17 18 other case. This case h before us on April 3rd, 2017 in Chicago, Illinois. We have jurisdi tion based upon section 6213 of the Internal Revenue Code. This opinion is rendered pursuant to section 7459 (b) and Tax Court Rule of Practice and Procedure 152. After this, section references are to the Internal Revenue Code or as noted to the Treasury Regulations, and Rule references are to the Tax Court Rules of 19 Practice and Procedure. 20 21 22 23 24 25 At the time the Petitioner filed her petition in this case she resided in Illinois. She timely filed the petition seeking review of the Internal Revenue Service Notice of |Deficiency. The Internal Revenue Service determined a deficiency in income tax and the only issue remaining 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 in dispute after t'he parties' settlement is whether Ms. Gordon withdrew $14,561 from her traditional IRA account at Chase Bank in 2014 and whether that amount should be included in her gross income in 2014. She 5 maintains that although the amount was rolled over 6 into a Roth IRA by the Chicago Municipal Employee's 7 Credit Union, this was an error and that she intended 8 the amount to be rolled over into a traditional IRA 9 which would not have been taxable in 2014. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ms. Gordon maintains that 'this error was on the part of the credit union and that she instructed them to place the amount in a traditional IRA account. However, the record is far from clear on that point as the documentation clearly shows that the amount was rolled over into a Roth IRA and Ms. Gordon signed that documentation. There was no evidence directly from the credit union about the interaction between the credit union employee and Ms. Gordon other than the specific documents just referenced. Ms. Gordon does not dispute the fact that apart from this error the amount rolled into the Roth IRA would have been includable in her taxable income in 2014. We must determine whether on these facts she may receive any relief from that taxation in 2014 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 because of the alleged error on the part of the credit union. As stated previously, there are various other issues in the case and they have been resolved. One of those issues involved Respondent's attempt initially to include a 10 percent additional tax on the IRA withdrawal. Respondent now concedes that that was inappropriate because·the amount was rolled over into a Roth IRA which would not, be subject to the additional 10 percent tax under section 72(t). Ms. Gordon's original IRA is governed by section 408. It is well settled that amounts distributed from traditional IRA's are generally taxable, Bunney v. Commissioner, 114| T.C. 259 (2000). Under section 408(A)(d)(6) which directly relates to the application of Roth IRA's, a conversion of a traditional IRA into a Roth IRA may be reversed as long as the transfer of funds reversing the conversion is completed by the tax return filing due date, including extensions, for the year in which the conversion took place. Ms. Gordon does not maintain that she made any attempt to file an amended return 23 which would conform with section 408(A)(d) (6). In 24 25 fact, she did attempt to file an amended return but it would have been after the date prescribed by that 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 section, and the amended return whic was filed did not attempt to reverse the transfer into a Roth IRA. Because the reversal as prescribed by the statute did not arise in this case, here is no specific statutory relief which woul be applicable to Ms. Gordon. The Treasury regulations are very 7 explicit about the proper treatment of the rollover 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of a traditional IRA into a Roth IRA. Treas. Reg. § 1.408 A-4 provides Q&A's which are specifically applicable. Q&A 7 states as follows: "What are the tax consequences when the amount is converted to a Roth IRA? A-7(a)! Any amount that is converted to a Roth IRA is includable in gross income as a distribution according to the Rules of section 408 (d) (1) (2) for the taxable year iý which the amount is distributed or transferred from the traditional IRA. " Based upon the statutory provisions and this regulation there is no dispute that the amount in question should be includable in Ms. Gordon's taxable income for 2014. We appreciate t4rst that may not have been her, original intent but it is not clear that her instructiions to the credit union were sufficient to establish her original intent. Because the distribution was taxable we are forced to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 strictly apply the statutory provisions and accordingly, we find the $14,561 is includable in income. As stated previously the parties did reach agreement on all the issues in the case and generally those agreements are very favorable to Ms. Gordon. The Rule 155 computation will be necessary to incorporate those agreements together with the outcome of the Court's opinion. This concludes the Court's Oral Findings of Fact and Opinion in this case. (Whereupon, at 10:46 a.m., the above- entitled matter was concluded.) 1 2 3 4 - 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com