Date of decision:
The petitioners are a married couple. The husband was the sole beneficiary of his father's IRA. He elected a lump sum option upon his father's death, and issued checks to both of his siblings totaling $37,000 based on what he thought his father wanted. The payment was made out of the distribution that the husband had received in the previous months. The petitioners filed a return for the year at issue but did not report the IRA distributions in income. The IRS issued a deficiency notice for over $27,000 plus a penalty in excess of $5,000. The court upheld the IRS position. Morris v. Comr., T.C. Memo. 2015-82.