MCNULTY TAX COURT PART TWO
March 28, 2022 - Douglas Myser
McNulty tax court part two. This tax court case has to do with keeping gold American Eagle coins from an IRA in McNulty's home, which eventually the tax court ruled violated the rules of the trust, as they should have been held by the trust not McNulty. Under Sec. 408(h), a custodial account is treated as a trust that can qualify as an IRA under Sec. 408(a) if its assets are held by a bank (as defined by Sec. 408(n) or another person who demonstrates to the IRS's satisfaction that the person will administer the account consistently with Sec. 408s requirement's, in which case the person can be treated as the account's trustee, as further delineated in Regs. Sec. 1.408-2(e), IRA assets cannot be commingled with other property except in a common trust fund or common investment fund (Sec. 408(a)(5). McNulty Tax Court part two.
The IRS contended that McNulty's receipt of the American Eagle coins constituted taxable distributions equal to their purchase price, finding that McNulty possessed the coins despite their purported ownership by Green Hill. McNulty argued that the coins were assets of Green Hill and that she did not use them, so her physical receipt of them did not constitute taxable IRA distributions. The Service further contended that McNulty violated the statute's prohibition against commingling IRA assets, which caused taxable distributions of the coins when they were stored in the home safe, even if the Tax Court were to conclude McNulty's physical possession of the coins did not. The Tax Court was not persuaded and the Mc Nulty's ended up with a very large distribution and taxable event.
It always wise to get good tax advice, otherwise you will end up needing Tax Resolution. Many people in these situations have to deal with a IRS Wage Garnishment and one of the options they can pursue with a good Tax Relief firm, is the IRS Fresh Start Program. These IRS programs are for those who end up with tax debt and need help, even people like the Mc Nulty's.