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Raymond McGaugh v. Commissioner: IRA Stock Purchase Wasn’t Taxable Distribution (7th Circuit)

The Seventh Circuit, in Raymond McGaugh v. Commissioner, has affirmed the Tax Court and held that an individual did not receive a taxable IRA distribution  when he instructed the IRA custodian to transfer funds to a corporation to purchase stock, finding that the individual didn’t have actual or constructive receipt of the funds. The opinion begin as follows:

This appeal from the Tax Court addresses whether a taxable distribution occurs where an individual directs his IRA custodian to wire funds directly from his IRA to purchase securities, but his custodian does not accept the resulting share certificate. For the reasons that follow, we conclude that the petitioner was never in actual or constructive receipt of funds from his IRA. Accordingly, we affirm the judgment of the Tax Court.

See full opinion by clicking here: RAYMOND MCGAUGH v. COMMISSIONER OF INTERNAL REVENUE | FindLaw

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.

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