UNITED STATES TAX COURT
JAMES JOSEPH TIMMERMAN, Petitioner v
.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10735-00S. Filed May 9, 2002.
James Joseph Timmerman, pro se.
Donald Brachfeld
, for respondent.
GOLDBERG, Special Trial Judge
: This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect at the time the petition was filed. The decision to be entered is not reviewable by any other court, and this opinion should not be cited as authority. Unless otherwise indicated, subsequent section references are to the Internal Revenue Code in effect for the year in issue, and Rule references are to the Tax Court Rules of Practice and Procedure.
Respondent determined a deficiency in petitioner’s Federal income tax for the taxable year 1998 in the amount of $20,319, and an accuracy-related penalty under section 6662(a) in the amount of $4,064.
The issues for decision are (1) whether a distribution received by petitioner in 1998 from his deceased brother’s profit-sharing plan is includable in petitioner’s gross income, and (2) whether petitioner is liable for an accuracy-related penalty for substantial understatement of income under section 6662(a).
The stipulation of facts and the attached exhibits are incorporated herein by this reference. At the time the petition was filed, petitioner resided in Jersey City, New Jersey. Petitioner’s brother, Martin Timmerman (Martin), died intestate on March 23, 1997. On October 10, 1997, petitioner was appointed Letters of Administration from the Surrogate’s Court of Hudson County, New Jersey, to administer and settle Martin’s estate.
Prior to his death, Martin worked for JP Morgan and held a deferred interest in a profit-sharing plan (plan). In a letter dated April 9, 1997, from Gary D. Naylor, Vice President of JP Morgan, petitioner was notified of the monetary balance in the plan and that he was the sole beneficiary of Martin’s plan. Attached to the letter were an explanation of payment options Benefit Election - Nonspousal Beneficiary/The Deferred ProfitSharing Plan of Morgan Guaranty Trust Company of New York and Affiliated Companies for United States Employees” (election form). It appears on the face of the election form that petitioner completed, signed, and dated the form October 30, 1998. Under the “benefit election” paragraph, petitioner checked off the box next to the choice “Annual installments over ____ years, beginning in the year the participant would have attained age ____. (No younger than 50 or no older than 70 ½.)†Petitioner left the blanks unanswered. The election form requested that petitioner return the completed form by December 15, 1998. It appears, however, that the form was never sent to Morgan Guaranty Trust Company of New York, and, therefore, the election was never in effect.
Petitioner failed to provide at trial any fully executed election forms, mail receipts, or other information to show that an election was made. According to petitioner, he misplaced a folder of mail receipts and other documents and it could not be retrieved.
Petitioner received a 1998 Form 1099-R, Distributions From
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., issued from American Century Services Corp. for JP Morgan, reflecting a gross distribution of $77,994.31 and Federal income tax withheld of $7,799.43.
Petitioner’s final argument is that he received the total distribution of the plan as the personal representative of Martin’s estate and not in the capacity of the sole beneficiary. We find no merit in petitioner’s argument. Under New Jersey law, a pension plan, like an insurance policy, is a nontestamentary asset, and therefore generally not subject to administration under a probate estate. See Czoch v. Freeman , 721 A.2d 1019, 1024 (N.J. Super. Ct. App. Div. 1999). We find that petitioner received the total plan amount in his individual capacity as the beneficiary and not the personal representative of Martin’s estate.
Based upon the above, we find that petitioner received a lump sum distribution in his individual name as the beneficiary of Martin’s plan. Accordingly, $77,994.31 is includable in petitioner’s gross income.
The last issue for decision is whether petitioner is liable for an accuracy-related penalty pursuant to section 6662(a) for the year in issue. Section 6662(a) imposes a penalty of 20 percent of the portion of the underpayment which is attributable to any substantial understatement of income tax. Sec. 6662(b)(2). A “substantial understatement” exists where the amount of the understatement exceeds the greater of 10 percent of the tax required to be shown on the return for the taxable year or $5,000. Sec. 6662(d)(1).
No penalty shall be imposed if it is shown that there was reasonable cause for the underpayment and the taxpayer acted in good faith with respect to the underpayment. Sec. 6664(c). Petitioner failed to address the accuracy-related penalty and offered no evidence that he had reasonable cause for the underpayment. Petitioner apparently sought no advice on the matter, and made no argument at trial. Accordingly, we sustain respondent’s determination.
We have considered all arguments made by the parties, and, to the extent not discussed above, conclude they are irrelevant or without merit.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered for respondent .