For this question, you will locate substantial authority for the following case.  You don't have to support the taxpayer's position.  Just simply identify the applicable criteria for the taxpayer's position.

Background

For years, financial experts have thought that you could do more than one tax-free IRA rollover in a given year.  The key was that those rollovers had to come from different accounts in order to qualify as tax-free.

Yet one tax lawyer decided to push the envelope with his personal finances.  According to the Tax Court's explanation of the facts, the tax attorney took out $65,000 out of his traditional IRA account, intending to replace that money within 60 days, as the tax law states, in order to have the transaction treated as an IRA rollover rather than a taxable distribution.  If the taxpayer had simply done that without any further money movements, IRA rollover rules would have applied, and there would be no dispute.

The problem, though, is that right before the taxpayer repaid the $65,000 to his traditional IRA account, he took $65,000 out of a different IRA account.  Then, just before the 60-day period for that withdrawal expired, his wife took $65,000 out of her traditional IRA, with a $65,000 repayment to the taxpayer's second IRA account taking place just days later.  Eventually, the taxpayer repaid the wife's IRA withdrawal and took the position that all of the transactions were tax-free IRA rollovers.  The IRS disagreed, arguing in part that the nested withdrawals and repayments didn't line up the way the taxpayer contended.

Instructions

To develop substantial authority for a tax position, you must identify the laws, rulings, cases, etc., that apply to the applicable tax situation.  For this case, identify the following:

a. The applicable tax codes or laws:

 

b. Are there any IRS tax rulings or findings that would also apply?

 

c. Are there any other sources or references that the taxpayer could use to support his position?

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a The applicable tax codes or laws The ... View the full answer