Court Opinion

ID: 9865575
Source: CourtListenerOpinion
Date Created: 2023-09-25 19:02:54.422773+00
Date Added: 2024-06-11T13:39:58.406869
License: Public Domain

United States Tax Court

                               T.C. Memo. 2023-118

                          JOSEPH MICHAEL BALINT,
                                 Petitioner

                                            v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                      —————

Docket No. 21452-16L.                                    Filed September 25, 2023.

                                      —————

Joseph Michael Balint, pro se.

Jeremy D. Cameron and Mark J. Tober, for respondent.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       GALE, Judge: Pursuant to section 6330(d)(1), 1 petitioner seeks
review of the determination of the Internal Revenue Service (IRS) Office
of Appeals 2 sustaining a proposed levy to collect federal income tax due
for the 2013 and 2014 taxable years. After concessions, 3 the remaining
issues for decision are whether (1) petitioner is required to include in his
gross income the full amounts of individual retirement account (IRA),
pension, and annuity distributions that he reported as income on his

        1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the
Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and
Rule references are to the Tax Court Rules of Practice and Procedure.
        2 On July 1, 2019, the Office of Appeals was renamed the Independent Office

of Appeals. See Taxpayer First Act, Pub. L. No. 116-25, § 1001, 133 Stat. 981, 983
(2019). We will use the name in effect at the times relevant to this case, i.e., the Office
of Appeals or Appeals.
        3 Petitioner now concedes that the determination for 2013 is correct.

                                  Served 09/25/23
                                             2

[*2] 2014 federal income tax return and (2) Appeals’ determination to
sustain the proposed levy was an abuse of discretion.

                               FINDINGS OF FACT 4

       Some of the facts are stipulated and are so found. The parties’
Stipulations of Facts and the Exhibits thereto, as well as their
Stipulation of Settled Issues, are incorporated herein by this reference.
Petitioner resided in Florida when he timely filed his Petition.

       Petitioner was incarcerated from December 17, 2013, through
January 6, 2015. During 2014 petitioner owned a retirement account
with Pershing, LLC (Pershing), and a life insurance policy with Pruco
Life Insurance Co. (Pruco).

      After his incarceration, in February 2014, petitioner sent his wife,
Jacqueline Grimes Balint (Jacqueline), a letter which stated:

        You do need to get power-of-attorney!! ASAP!! Call Glen
        Abbott & explain the situation. He will help us! And
        remember, it’s confidentia[l] so don[’]t be worried. Tell him
        I want to give you everything! House, cars, motorcycles &
        my bank accounts—all of them in your name, making me
        beneficiary! He will know what to do. You need to do this
        now!! In case something happens to me. And the state
        can[’]t take it when this is all over. Call now!! Meet with
        him & get it done. I will have to sign, but he will know how
        to take care of that with me here. Ok!! Now! . . . So you
        won[’]t lose anything [&] you have access to everything.
        Use this letter if he needs it!

         4 Petitioner states on brief that he does not object to respondent’s proposed

findings of fact except to the extent that they are phrased to favor respondent.
Respondent, however, objects to petitioner’s proposed findings of fact on the grounds
that petitioner’s brief fails to include references to the parts of the transcript, exhibits,
or other sources relied upon to support petitioner’s statements of fact, see
Rule 151(e)(3), and relies on documents and factual assertions that are not in evidence.
We agree with respondent that petitioner’s brief fails to comply with Rule 151(e)(3),
and we have considered petitioner’s brief only to the extent that it consists of argument
concerning the applicable law and the factual materials that are part of the record.
See, e.g., Ashkouri v. Commissioner, T.C. Memo. 2019-95, at *23–24. Our Findings of
Fact are accordingly based on respondent’s undisputed proposed findings of fact, the
parties’ Stipulations, the Exhibits we have received in evidence, and the trial
transcript.
                                     3

[*3] (Emphasis omitted.) In a second letter he sent to Jacqueline that
same month, petitioner wrote:

      Have to get my name off the house title, car & motorcycle
      titles & trailer too! All that stuff is yours. Not too bad a
      present?! Please use all wisely as I cannot replace any of
      it. Once it[’]s gone, it[’]s gone. . . . I have spent so much of
      my savings, no complaints! But we can not replace it!! A
      fixed income for sure. Just be careful.

(Emphasis omitted.)

       In March 2014 petitioner spoke to Jacqueline by telephone. He
understood from that conversation that his monthly Social Security
payments of $1,200 were no longer arriving. Petitioner therefore
instructed Jacqueline to go to his attorney, Glen Abbott, to obtain a
power of attorney that would allow her to receive $1,200 per month from
petitioner’s financial planner until he returned home.

      Mr. Abbott mailed a letter to petitioner along with a proposed
power of attorney (POA). The letter advised petitioner that the POA
was “a very powerful document” that “would allow for Jacqueline to
handle a wide array of matters for [him].” Petitioner signed the POA on
March 19, 2014, while incarcerated. Petitioner signed the POA because
he wanted to take care of Jacqueline and was trying to save his
marriage.

       In the POA, which stated that it was governed by Florida law,
petitioner appointed Jacqueline as his agent and granted her “full power
and authority to perform any act, power, or duty that I may now or
hereafter have and to exercise any right that I now have or may
hereafter acquire.”      Petitioner further authorized Jacqueline to
“withdraw . . . money or property deposited with or left in the custody of
a financial institution” and to “withdraw benefits from” any retirement
plan. In addition petitioner initialed “yes” beside provisions granting
Jacqueline “the authority to make gifts of [his] property outright to any
person, outright or in trust, or otherwise for the benefit of any person”
and stating that it was his “specific intent” to authorize Jacqueline to
take certain actions that might otherwise constitute prohibited self-
dealing. With respect to self-dealing, the POA stated that

      [Petitioner’s] designated agent . . . is authorized to take
      actions in [his] behalf under the terms of this instrument
      that may benefit the agent as well as his or her immediate
                                     4

[*4]   family by providing for health, education, maintenance or
       support; in other words, actions that might otherwise be
       considered prohibited as self-dealing are specifically
       authorized under the terms of this instrument for the
       purpose of tax, financial or estate planning, for
       [petitioner’s] benefit, or for qualifying for public assistance
       such as Medicaid, Supplemental Security Income or other
       public assistance programs for which [petitioner] may be
       eligible.

       A few weeks after receiving the POA, on April 8, 2014, Jacqueline
used her authority thereunder to withdraw $25,000 from the cash value
of petitioner’s life insurance policy with Pruco for deposit into the
couple’s joint checking account. She thereafter transferred the amount
in five $5,000 installments between April 8 and April 14 into her own
individual accounts. Then on April 14, 2014, she used the POA to effect
a distribution of $51,300 from petitioner’s IRA account at Pershing into
their joint checking account. The following day she transferred $45,000
from the joint checking account into her individual accounts and an
additional $2,000 in the same manner one day later. On August 27,
2014, she used the POA to effect a distribution of an additional $34,650
from petitioner’s IRA account into their joint checking account and
shortly thereafter transferred a total of $31,500 in installments between
August 27 and September 2, 2014. On September 25, 2014, she used the
POA to withdraw an additional $22,592.57 from the cash value of
petitioner’s aforementioned life insurance policy that was deposited into
the couple’s joint checking account, and on the same day she withdrew
$22,408.64 from the joint account. She transferred an additional $1,000
to her individual account five days later. On October 2, 2014, she used
the POA to effect another $3,927.09 distribution from petitioner’s IRA
account into the couple’s joint checking account, followed by a transfer
of $4,000 from the joint account into her individual account. The
amounts Jacqueline withdrew from petitioner’s life insurance policy and
IRA account in 2014 totaled $137,469.66, and the amounts she
thereafter transferred to her own individual accounts totaled
$130,908.64, a difference of $6,561.02.

      Jacqueline used the amounts taken from petitioner’s life
insurance policy and IRA to move from the couple’s residence in Florida
to Kentucky, to renovate a house there, to care for her ailing mother,
and to pay living expenses.
                                            5

[*5] Jacqueline then, sometime in late September 2014 (the exact date
not having been established in the record), commenced a proceeding for
divorce while petitioner was still incarcerated. Petitioner first learned
of Jacqueline’s desire for a divorce when he was served with the divorce
papers in prison in early October 2014. 5

       Petitioner was released from prison in January 2015. In April
2015 he filed a federal income tax return for 2014. The 2014 return
indicated that petitioner’s filing status was married filing separately.
The return reported the total tax due as $59,862, with a balance due,
after accounting for withholding credits, of $34,614.

       The gross income reported on petitioner’s 2014 return was
$223,191, consisting of the following items: (1) taxable interest of $375;
(2) taxable IRA distributions of $154,477; (3) taxable distributions from
pensions and annuities of $67,078; 6 and (4) taxable Social Security
benefits of $1,261. 7 Petitioner reported the IRA and pensions and
annuities distributions as his income, even though he did not believe
these amounts were properly taxable to him, because he had received
IRS forms reporting them and was concerned that failing to report them
could constitute a violation of the terms of his probation. He anticipated
being able to resolve the matter with the IRS after filing the return.

       Respondent assessed the tax petitioner reported as due on his
2014 return. To collect petitioner’s unpaid tax liabilities for 2013 and
2014, respondent sent him a notice of intent to levy. In response
petitioner requested a collection due process (CDP) hearing by timely
submitting to respondent a Form 12153, Request for a Collection Due
Process or Equivalent Hearing, concerning the 2013, 2014, and 2015 8
taxable years. Petitioner did not check any of the boxes on his
Form 12153 to indicate that he wished to pursue a collection alternative.

        5 The divorce action Jacqueline initiated did not result in the termination of

the marriage. Petitioner himself commenced a separate divorce action while this case
was pending (discussed infra).
        6 Petitioner reported total pension and annuity distributions of $67,162.

        7 Petitioner reported total Social Security benefits of $1,483.

         8 Upon receipt of petitioner’s hearing request, the IRS advised him that he was

not entitled to a hearing with respect to 2015, since no notice of intent to levy had been
sent to him, and no balance was due, with respect to that year. Accordingly, no
collection action concerning 2015 is at issue in this case.
                                    6

[*6] He did, however, check a box indicating that he wished to make a
claim for innocent spouse relief, and he submitted Form 8857, Request
for Innocent Spouse Relief, along with his Form 12153. He also attached
a written statement to his Form 12153 in which he alleged that
Jacqueline had stolen more than $240,000 from his IRA and pension
accounts and that he had not received any of those funds.

       An Appeals settlement officer (SO) was assigned to conduct
petitioner’s CDP hearing with respect to 2013 and 2014. The SO sent
petitioner a letter in which she described the matters that she would
consider during the hearing, requested that petitioner submit a
Form 433–A, Collection Information Statement for Wage Earners and
Self-Employed Individuals, with supporting documentation, and set a
date and time for a telephone conference.

       In accordance with the SO’s request, petitioner submitted a
Form 433–A, along with supporting financial information and an
explanatory letter emphasizing his claim that Jacqueline had taken
“everything [he] had” and that he had not received any money when she
did so. Petitioner participated in the telephone conference as scheduled.

        Following the telephone conference, Appeals sent petitioner a
notice of determination sustaining the proposed levy. The SO explained
in the notice of determination that she had verified that the
requirements of applicable law and administrative procedure had been
satisfied with respect to the collection of petitioner’s unpaid tax
liabilities. She concluded that petitioner was ineligible for innocent
spouse relief because he and Jacqueline had not filed joint returns for
the years at issue and that he had provided insufficient information
about the legal action he had taken with respect to Jacqueline’s
withdrawals from his accounts to warrant any adjustment to the
amounts of the underlying tax liabilities.

       The SO also noted that because petitioner’s position was that
Jacqueline should be responsible for paying the underlying liabilities,
he had not offered a collection alternative. She therefore concluded that
the proposed levy appropriately balanced the need for efficient collection
of taxes against the intrusiveness of the collection action.

       Petitioner timely filed his Petition for review of the notice of
determination. While this case was pending, petitioner filed an action
for divorce from Jacqueline in the Circuit Court of Citrus County,
Florida (state court). As part of that proceeding, to which respondent
                                    7

[*7] was not a party, the state court issued an “Order on Husband’s
Motion for Temporary Relief.” The state court concluded therein that
petitioner had authorized Jacqueline to withdraw a total of $10,800 from
his IRA, which had “directly benefited” him, and that he should thus be
liable for the tax due on that income.

       The state court also concluded, however, that Jacqueline should
be liable for the tax due on an additional $179,296 of income—consisting
of a further $89,320 of IRA distributions and $89,976 of life insurance
distributions—since petitioner did not receive any financial benefit from
those funds and Jacqueline had obtained them without petitioner’s
knowledge or consent.

                               OPINION

I.    Administrative Hearing and Judicial Review

       Section 6331(a) authorizes the Secretary to levy upon property
and property rights of a taxpayer who fails to pay the tax due within ten
days after notice and demand for payment is made. Before doing so,
however, the Secretary must give the taxpayer written notice of his or
her right to a hearing. § 6330(a)(1), (b)(1).

        During the hearing a taxpayer may raise “any relevant issue,”
such as a challenge to the appropriateness of the collection action and
the possibility of collection alternatives. § 6330(c)(2)(A). A taxpayer
may also challenge the existence or amount of the underlying tax
liability, but only if the taxpayer did not receive a notice of deficiency
with respect to the liability or otherwise have an opportunity to dispute
it. § 6330(c)(2)(B). A taxpayer is treated as not having had an
opportunity to dispute a liability that is reported as due on a return.
Montgomery v. Commissioner, 122 T.C. 1, 9 (2004). The Appeals officer
who conducts the hearing must then determine whether to uphold the
collection action, taking into consideration (1) whether the requirements
of applicable law and administrative procedure have been met, (2) any
relevant issues raised by the taxpayer, and (3) whether the proposed
collection action appropriately balances the need for efficient collection
of taxes with the taxpayer’s legitimate concern that the collection action
be no more intrusive than necessary. § 6330(c)(3).

      Pursuant to section 6330(d)(1), this Court has jurisdiction to
review the Appeals officer’s determination. If the validity of the
underlying tax liability is properly at issue, we review the liability
determination de novo. Goza v. Commissioner, 114 T.C. 176, 181–82
                                          8

[*8] (2000). We review all other determinations concerning a proposed
collection action for abuse of discretion. Id. at 182. An abuse of
discretion occurs if an Appeals officer issues a determination
“arbitrarily, capriciously, or without sound basis in fact or law.”
Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

II.    Underlying Tax Liability for 2014

      The underlying tax liability reported on petitioner’s 2014 return
is properly at issue in this case. Therefore, we review the liability
de novo. The taxpayer generally has the burden of proof with respect to
the underlying liability. Rule 142(a); Thompson v. Commissioner, 140
T.C. 173, 178 (2013).

       Petitioner has now conceded that $42,259 of the $154,477 he
reported on his 2014 return as taxable IRA distributions is properly
taxable to him, leaving $112,218 of the reported amount in dispute. Of
the IRA distributions he concedes are taxable, $31,459 was paid by the
State of Florida and $10,800 was paid by Pershing. He disputes that
any portion of the $67,078 reported on the return as taxable pensions
and annuities is taxable to him. Moreover, he has stipulated that he
owned the accounts from which the disputed $112,218 of IRA
distributions and $67,078 of pensions and annuities (collectively,
disputed amounts) were withdrawn.

      Petitioner contends that the disputed amounts should not be
included in his gross income because Jacqueline breached her fiduciary
duty under the POA and he “never gave [her] permission to ‘take,’”
among other things, his “entire life’s savings” of “[o]ver $200,000.” In
support of his position, petitioner points to sections 709.2114 and
709.2201 of the Florida Statutes, Jacqueline’s testimony at trial, 9 bank
records substantiating Jacqueline’s withdrawals from his IRA and life
insurance policy, and the state court’s order purporting to determine
that Jacqueline solely benefited from, and should be liable for the tax
due on, certain amounts withdrawn from petitioner’s accounts.

       Respondent counters that the state court’s findings are not
conclusive of any issues in this case because essential elements of res
judicata and collateral estoppel are absent. Respondent further
contends that the disputed amounts should be included in petitioner’s

        9 Jacqueline testified to the effect that she used the amounts she took from

petitioner’s accounts to move and renovate a residence in another state and to support
herself and her ailing mother.
                                            9

[*9] gross income because Jacqueline was authorized to withdraw them
from petitioner’s accounts pursuant to the POA and petitioner’s written
and oral instructions. Respondent also contends that withdrawal of the
disputed amounts provided an economic benefit to petitioner by allowing
him to provide for Jacqueline while he was incarcerated and to avoid
losing his assets to creditors.

       We agree with respondent that neither the state court’s findings
of fact concerning the extent to which Jacqueline exclusively benefited
from the IRA and life insurance distributions, nor the state court’s legal
conclusions drawn therefrom, have preclusive effect in this case. We
agree with petitioner, however, that the preponderance of the evidence
establishes that he did not authorize or benefit from Jacqueline’s
withdrawal of the disputed amounts, and we consequently hold that the
disputed amounts are not includible in petitioner’s gross income for
2014. 10

        A.      Effect of State Court Order

       The preclusion doctrines of res judicata and collateral estoppel 11
“have the dual purpose of protecting litigants from the burden of
relitigating an identical issue and of promoting judicial economy by
preventing unnecessary or redundant litigation.”          Koprowski v.
Commissioner, 138 T.C. 54, 59 (2012) (quoting Meier v. Commissioner,
91 T.C. 273, 282 (1988)).

       “Res judicata prevents repetitious suits involving the same cause
of action and is rooted in ‘considerations of economy of judicial time and
public policy favoring the establishment of certainty in legal relations.’”
Breland v. Commissioner, 152 T.C. 156, 160 (2019) (quoting
Commissioner v. Sunnen, 333 U.S. 591, 597 (1948)). “The elements of
res judicata are: (1) identity of parties, (2) prior judgment by a court of
competent jurisdiction, (3) final judgment on the merits, and (4) the

        10 Because we hold that the disputed amounts are not includible in petitioner’s

income, we need not address whether he is entitled to a theft loss deduction under
section 165 as he contends he is in an amendment to the Petition.
         11 Although a party asserting res judicata or collateral estoppel ordinarily must

plead it as an affirmative defense, see Rule 39, the policies that the preclusion doctrines
implicate are sufficiently important that a trial court, or even an appellate court, may
raise them sua sponte in appropriate circumstances, see, e.g., Shurick v. Boeing Co.,
623 F.3d 1114, 1116 (11th Cir. 2010) (per curiam).
                                     10

[*10] same cause of action.” Id. at 160–61 (citing Hambrick v.
Commissioner, 118 T.C. 348, 351 (2002)).

        Collateral estoppel is a narrower doctrine that “precludes
litigation of issues in a second cause of action if those issues were
actually litigated and necessary to the outcome of the first action.” Id.
at 161 (citing Hambrick, 118 T.C. at 353). In order for collateral estoppel
to bind a party, the following requirements must be met:

      (1) the issue in the second suit must be identical in all
      respects with the one decided in the first suit, (2) there
      must be a final judgment rendered by a court of competent
      jurisdiction, (3) the party against whom collateral estoppel
      is invoked must have been a party (or privy to a party) to
      the prior judgment, (4) the relevant issue must have been
      actually litigated and the resolution of the issue must have
      been essential to the prior decision, and (5) controlling facts
      and applicable legal rules must remain unchanged from
      those in the prior litigation.

Id. (citing Peck v. Commissioner, 90 T.C. 162, 166–67 (1988), aff’d, 904
F.2d 525 (9th Cir. 1990)). Although collateral estoppel traditionally
applied only if mutuality of parties was present, the Supreme Court has
broadened the doctrine to permit the application of “nonmutual”
collateral estoppel in certain circumstances. See United States v.
Mendoza, 464 U.S. 154, 157–59 (1984). Nonmutual collateral estoppel
can apply, however, only against a litigant who unsuccessfully litigated
an issue as a party to a prior suit, see id. at 159 n.4 (describing offensive
and defensive uses of nonmutual collateral estoppel), and it applies
rarely, if ever, against the federal government, see id. at 162–63. The
Supreme Court held in Mendoza that “nonmutual offensive collateral
estoppel simply does not apply against the [G]overnment in such a way
as to preclude relitigation of issues such as those involved in this case.”
Id. at 162.

       We agree with respondent that to the extent the state court’s
order would benefit petitioner, neither res judicata nor collateral
estoppel should give preclusive effect to the fact findings or legal
conclusions of that order in this case. Respondent was not a party (nor
in privity with a party) to the state court divorce proceeding, so neither
res judicata nor collateral estoppel can apply against him on the basis
of any order issued therein.
                                         11

[*11] B.       Inclusion of Disputed Amounts in Gross Income

        Except as Congress has otherwise provided, a taxpayer’s gross
income encompasses “all income from whatever source derived,”
including from such sources as pensions, annuities, and proceeds from
life insurance contracts. § 61(a)(9), (10), and (11). 12 A taxpayer using
the cash method of accounting must include items in his or her gross
income for the taxable year in which they are actually or constructively
received. § 451(a); Treas. Reg. § 1.451-1(a). In addition Congress has
provided by statute that amounts distributed from IRAs are generally
includible in the gross income of the “payee” or “distributee” and taxed
as provided under section 72, see § 408(d)(1), and that amounts
“received” under a life insurance contract, but not paid as an annuity,
are includible in the recipient’s gross income to the extent that they
exceed the amount invested in the contract, see § 72(e)(1)(A), (5)(A), (C).

       In some circumstances we have concluded that funds
misappropriated from a taxpayer’s financial accounts were not
includible in the taxpayer’s gross income because the taxpayer was not
the payee, distributee, or recipient of the misappropriated funds. For
example, observing that “[w]hether there is an economic benefit
accruing to the taxpayer is the crucial factor in determining whether
there is gross income,” we have held that a taxpayer was not required to
include in his gross income amounts that his wife fraudulently withdrew
from his IRAs without his knowledge. Roberts v. Commissioner, 141
T.C. 569, 582 & n.19 (2013).

       We reasoned that the taxpayer could not be treated as the payee
or distributee of the amounts in question under section 408(d)(1)
because “the IRA distribution requests were unauthorized, the
endorsements on the checks that were issued pursuant to the requests
were forged, [the taxpayer] did not receive the economic benefit of the
IRA distributions, and the IRA distributions were not made to discharge
any legal obligation of his.” Roberts, 141 T.C. at 582 (footnote omitted).
Instead, we explained, the taxpayer’s wife had benefited from the IRA
distributions, which she used for, among other purposes, establishing a
separate household. Id. at 572–73.

       12 In 2017 section 61(a) was amended to redesignate paragraphs (9), (10),

and (11) as paragraphs (8), (9), and (10). See Tax Cuts and Jobs Act of 2017, Pub. L.
No. 115-97, § 11051(b)(1), 131 Stat. 2054, 2089.
                                   12

[*12] We have reached similar conclusions in cases where a taxpayer’s
agent has misappropriated the taxpayer’s funds while purporting to act
on the taxpayer’s behalf. In Grant v. Commissioner, T.C. Memo.
1995-29, 69 T.C.M. (CCH) 1716, 1719, for instance, we pointed out that
although a taxpayer is generally treated as the recipient of any income
received by his or her agent, that rule does not apply “where the agent
receives and misappropriates funds for his own use, where the principal
had no knowledge of such misappropriation, and where the principal
received no economic benefit from the misappropriated funds.” The
evidence in Grant showed that an agent whom the taxpayers had
engaged to help them consolidate and pay personal debts had caused a
distribution from one of their pension accounts without their knowledge
or authorization, and that their agent (and the debt consolidation
company with which he worked) had kept the money instead of using it
to pay their debts or otherwise benefit them. Id. We accordingly held
that the distribution was not includible in the taxpayers’ gross income.
Id. Relatedly, we have held that where an agent appointed under a
power of attorney made withdrawals for her own benefit from the
principal’s accounts, and the power of attorney had not authorized the
agent to make gifts to herself, the amounts in question were properly
characterized as the agent’s income. Wilkinson v. Commissioner, T.C.
Memo. 1993-336, 66 T.C.M. (CCH) 270, 274–75.

      Our reasoning in Roberts, Grant, and Wilkinson applies with
equal force in this case, where the withdrawals that Jacqueline made
from petitioner’s accounts were outside the scope of her authority under
the POA, made without his knowledge, and did not result in any
economic benefit to him.

       We interpret powers of attorney in accordance with state law, see
Estate of Powell v. Commissioner, 148 T.C. 392, 417 (2017), and the POA
at issue here stated that it was governed by Florida law. The Florida
Power of Attorney Act establishes that a power of attorney authorizes
an agent to act in place of a principal as provided by statute, the common
law of agency, and principles of equity. See Fla. Stat. §§ 709.2102(9),
709.2301 (2022).

       An agent appointed under a power of attorney has a fiduciary
relationship to the principal. Fla. Stat. § 709.2114(1). Therefore,
“[n]otwithstanding the provisions in the power of attorney” an agent
“[m]ust act in good faith” and “[m]ay not act contrary to the principal’s
reasonable expectations actually known by the agent” or, except as
otherwise permitted by law, “in a manner that is contrary to the
                                     13

[*13] principal’s best interest.” Id. Florida law permits a principal to
authorize an agent to take certain actions that may be contrary to the
principal’s best interest, such as making gifts of the principal’s property
and changing beneficiary designations. Fla. Stat. § 709.2202(1)(c), (e).

       In general, “an agent may only exercise authority specifically
granted to the agent in the power of attorney and any authority
reasonably necessary to give effect to that express grant of specific
authority,” Fla. Stat. § 709.2201(1), and “powers of attorney are strictly
construed and will be closely examined in order to ascertain the intent
of the principal,” Manor Oaks, Inc. v. Campbell, 276 So. 3d 830, 833 (Fla.
Dist. Ct. App. 2019) (quoting De Bueno v. Castro, 543 So. 2d 393, 394
(Fla. Dist. Ct. App. 1989)). As a result, a general grant of authority to
an agent normally must yield to a more specific limitation of the agent’s
authority so as to avoid rendering the specific limitation superfluous.
See James v. James, 843 So. 2d 304, 308 (Fla. Dist. Ct. App. 2003).

       As we have noted, the POA authorized Jacqueline to make gifts
of petitioner’s property and to take actions that could otherwise be
understood to constitute prohibited self-dealing. But the same sentence
in the POA that authorized Jacqueline, as petitioner’s agent, “to take
actions . . . that may benefit the agent . . . by providing for health,
education, maintenance or support” immediately limited that authority
by explaining that “in other words, actions that might otherwise be
considered prohibited as self-dealing are specifically authorized . . . for
the purpose of tax, financial or estate planning, for [petitioner’s] benefit,
or for qualifying for public assistance . . . for which [petitioner] may be
eligible.” (Emphasis added.)

       This sentence, strictly construed, does not amount to an open-
ended authorization for Jacqueline to exercise her authority under the
POA for her own benefit. Instead, its clear implication is that Jacqueline
was authorized to take actions that would benefit herself only if the
benefit to her was incidental to planning undertaken primarily to
benefit petitioner, or to ensuring that petitioner would qualify for public
assistance. Construing the sentence to grant any broader authority to
engage in self-dealing would render superfluous the clarifying
restatement of the grant of authority following the phrase “in other
words.”

      The preponderance of the evidence establishes that Jacqueline
engaged in self-dealing for her own benefit and not as an incident to
accomplishing any authorized purpose on petitioner’s behalf.
                                          14

[*14] Jacqueline testified at trial that she withdrew money from
petitioner’s accounts and used it to move, establish a separate
household, and pay her living expenses. The statements for the joint
checking account confirm that Jacqueline caused the distribution of at
least $89,877.09 from petitioner’s Pershing IRA and $47,592.57 from his
Pruco life insurance policy, and that she withdrew or transferred all but
$6,561.02 of that money from the joint account soon after the
distributions. These transactions took place while petitioner was
incarcerated, and he was unaware of them until he was released and
returned home.

       Except to the extent that petitioner concedes that $10,800 13 of the
total amount distributed by Pershing is properly includible in his gross
income, he did not plausibly benefit from any use of the funds that
Jacqueline concedes she withdrew from petitioner’s life insurance and
IRA account and used for her benefit. Because the POA authorized
Jacqueline to engage in self-dealing only in connection with specified
activities undertaken for petitioner’s benefit, her use of the remainder
of the withdrawn funds for her own benefit constituted unauthorized
self-dealing and was a breach of her fiduciary duty. 14 We therefore find

       13 We observe that this amount is equivalent to nine monthly distributions of

$1,200—i.e., the total amount that petitioner likely would have expected to be
distributed between April and December 2014 to replace his discontinued Social
Security benefits. Moreover, this amount exceeds the $6,561.02 difference between the
total deposits to the joint account from Pershing and Pruco and the amounts that were
withdrawn or transferred from the joint account soon after those deposits. We
accordingly conclude that the $10,800 that petitioner concedes is includible in his
income includes the otherwise unaccounted for $6,561.02 of deposits into the joint
account, and we need not inquire further into the ultimate disposition of that portion
of the deposits.
        14 Moreover, even if the POA could be construed to authorize self-dealing under

these circumstances, Jacqueline still would have breached her fiduciary duty because
her actions were contrary to petitioner’s reasonable expectations that were actually
known to her. Jacqueline acknowledged at trial that she corresponded with petitioner
by letter and telephone while he was incarcerated. Petitioner’s letters to Jacqueline
indicated that he wished to give her control of his property because he feared for his
safety, and Jacqueline indicated at trial that she understood as much from their
correspondence. The letters further indicated that despite petitioner’s statements
suggesting that he wanted to give property to Jacqueline, he expected her to use the
POA to conserve his property for their joint benefit: petitioner stated that he wanted
Jacqueline to make him the “beneficiary” of the property, and he exhorted her to “use
all wisely” and “be careful” because they would not be able to replace his savings. We
also found credible petitioner’s testimony that he directed Jacqueline by telephone to
obtain the POA so that she could withdraw $1,200 per month from his savings to
                                         15

[*15] that petitioner did not authorize the remainder of the withdrawals
and that Jacqueline was, more likely than not, the economic beneficiary
of $79,077.09 of the distributions from Pershing and $47,592.57 of the
distributions from Pruco. She, rather than petitioner, is therefore the
distributee or recipient of those amounts.

       This leaves unaccounted for $33,140.91 of disputed IRA
distributions and, assuming for present purposes that petitioner
reported the life insurance proceeds on his return as pensions and
annuities, $19,485.43 of disputed pensions and annuities. We infer from
the evidence we have just described, and find it more likely than not,
that Jacqueline (and not petitioner) was also the economic beneficiary,
and thus the distributee or recipient, of those amounts. 15

       Under the circumstances of this case, we therefore conclude that
petitioner was not the distributee, payee, or recipient of any portion of
the disputed amounts, and those amounts are not includible in
petitioner’s gross income for 2014.

III.   Issues Other than the Underlying Tax Liability

      We review the remaining issues relating to Appeals’
determination for abuse of discretion. For 2014 we find no error in
Appeals’ determination except to the extent that the SO declined to
adjust the amount of petitioner’s underlying tax liability. Our review of
the administrative record confirms (and petitioner does not dispute) that
the SO properly verified that all requirements of applicable law and
administrative procedure were satisfied, and petitioner has stipulated
that he did not seek a collection alternative during the CDP hearing.

       In the absence of a proposed collection alternative, we find no
error in the SO’s conclusion that the proposed levy appropriately
balanced the need for efficient collection of taxes with petitioner’s
legitimate interest that the collection activity be no more intrusive than
necessary. See, e.g., Roberts v. Commissioner, T.C. Memo. 2021-131,

replace his suspended Social Security benefits. In view of these circumstances, which
were known to Jacqueline, we do not think she could have concluded that petitioner
reasonably expected her to liquidate his accounts and use all of the proceeds for her
sole benefit.
        15 We note in this regard that respondent conceded at trial that the

disagreement between the parties is limited to whether the disputed amounts are
petitioner’s income and does not encompass whether the disputed amounts were
withdrawn from petitioner’s accounts.
                                   16

[*16] at *8 (“It is not an abuse of discretion to decline to consider
something that was never proposed.”). We therefore sustain Appeals’
determination concerning 2014 to the extent that any unpaid balance
remains due after petitioner’s underlying tax liability is adjusted to
reflect our conclusions herein.

IV.   Conclusion

       In accordance with petitioner’s concession concerning 2013, we
will sustain Appeals’ determination to proceed with the proposed levy
for that year. With respect to 2014, we hold that the disputed amounts
are not includible in petitioner’s gross income. We will consequently
sustain Appeals’ determination to proceed with the proposed levy for
2014 only to the extent of any unpaid tax liability that remains due after
the amount of that liability is adjusted to reflect the correct amount of
petitioner’s gross income.

      To reflect the foregoing,

      Decision will be entered under Rule 155.