                        T.C. Memo. 2000-225



                      UNITED STATES TAX COURT



            JEFFREY MICHAEL STEINGOLD, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 19841-98.                       Filed July 28, 2000.



     Jeffrey Michael Steingold, pro se.

     Dustin M. Starbuck, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION



     FOLEY, Judge:   By notice dated October 29, 1998, respondent

determined deficiencies of $4,782 and $9,237, and additions to

tax, pursuant to section 6651(a)(1), of $530 and $1,882, relating

to petitioner’s 1993 and 1994 Federal income taxes, respectively.

Unless otherwise indicated, all section references are to the
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Internal Revenue Code (Code) in effect for the years in issue,

and all Rule references are to the Tax Court Rules of Practice

and Procedure.

     The issues for decision are whether:     (1) The notice of

deficiency relating to petitioner’s 1993 return was timely; (2)

petitioner is liable for tax relating to undistributed trust

income; and (3) petitioner is liable for additions to tax for

failing to file his 1993 and 1994 returns in a timely manner.

                           FINDINGS OF FACT

     Petitioner resided in Ashland, Virginia, at the time the

petition was filed.   Petitioner filed his 1993 and 1994 returns

on September 23, 1994, and December 15, 1995, respectively.       The

notice of deficiency was sent to petitioner on October 29, 1998.

     Petitioner was a beneficiary of a trust which provided that

he receive “the entire net income of his respective share, in

convenient installments.”    The trustee had the discretion to

distribute principal.   No distributions were made from the trust

in 1993 or 1994.   An order of the Virginia Beach Chancery Court

(State Court), dated February 17, 1994, required the trustee to

retain all trust income.    Subsequently, the State Court

terminated the trust and distributed petitioner’s share to

satisfy his obligations.
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                                OPINION

1.   Timeliness of Notice of Deficiency

     Petitioner filed his 1993 return on September 23, 1994, and

respondent mailed the notice of deficiency on October 29, 1998.

Generally, a tax must be assessed within 3 years after the date

on which the return was filed, unless the period is extended by

agreement.    See sec. 6501.   Respondent contends that, on February

18, 1997, petitioner signed a Form 872 (i.e., Consent to Extend

the Time to Assess Tax) extending the limitations period relating

to petitioner’s 1993 return.    Respondent further contends that he

lost the original Form 872.    Respondent, however, offered a copy

of a Form 872 that was undated and allegedly signed by

petitioner.    An individual’s name signed on a document creates a

rebuttable presumption that such individual signed the document.

See Hennen v. Commissioner, 35 T.C. 747, 748 (1961).     Petitioner,

however, contends he did not sign any document extending the

limitations period, and we find his testimony credible.    In

addition, the testimony of respondent’s witnesses (i.e., an

Internal Revenue Service agent and a handwriting expert) was not

convincing.    We conclude that petitioner did not extend the

limitations period, and, accordingly, the notice of deficiency

relating to 1993 was not timely.
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2.   Trust Income

     The terms of the governing instrument and applicable local

law determine whether trust income is required to be distributed

currently (i.e., whether the beneficiary has a present right to

receive income).    See sec. 1.651(a)-2, Income Tax Regs.   If trust

income is currently distributable, and no other distributions are

made in a taxable year, the trust is a simple trust.    Tax

treatment of a simple trust is governed by sections 651 and 652.

Section 651(a) allows the trust a deduction for income “required

to be distributed currently”.    Section 652(a) subjects the

beneficiary to taxation on amounts “required to be distributed,

whether distributed or not.”

     A trust not governed by the simple trust provisions is

subject to the complex trust provisions.    “A trust may be a

simple trust for one year and a complex trust for another year.”

Sec. 1.651(a)-1(b), Income Tax Regs.    Pursuant to sections 661

and 662, only that part of the trust income which is paid or

credited to the beneficiary during the year may be deducted by

the trust and taxed to the beneficiary.    The trustee of a complex

trust may have discretion to accumulate or distribute all, or

part, of the income to the beneficiary.    Thus, the Code assures

that income distributions will “appear in the fiduciary’s return,

if they are still his; in the beneficiary’s, only in case he has

become presently entitled to them, or received them.”
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Commissioner v. Stearns, 65 F.2d 371, 373 (2d Cir. 1933).      In

essence, the Code is designed to impose tax on the owner of trust

income, and a present right to receive income is equivalent to

current ownership of such income.    See Freuler v. Helvering, 291

U.S. 35, 42 (1934).

       Respondent contends that petitioner had a present right to

receive income.    Petitioner contends he had no such right.

Respondent relies on a line of cases which hold that income is

taxable to the current income beneficiary even though the trustee

withheld distributions to such beneficiary during the course of

State legal proceedings.    See United States v. Higginson, 238

F.2d 439 (1st Cir. 1956); Estate of Bruchmann v. Commissioner, 53

T.C. 403 (1969); DeBrabant v. Commissioner, 34 B.T.A. 951 (1936),

affd. 90 F.2d 433 (2d Cir. 1937).    In each of these cases,

however, the trustee exercised discretion and was not required to

accumulate trust income.

       Because of the State Court order, petitioner did not have a

present right to receive income distributions in 1994.    See Blair

v. Commissioner, 300 U.S. 5 (1937)(holding that State law

determines the right of the beneficiary to trust income).      The

State Court order represented petitioner’s rights under Virginia

law.    See Young v. Commissioner, 110 T.C. 297, 300 (1998)(stating

that Federal authorities must give “proper regard” to relevant

State court rulings, quoting Commissioner v. Estate of Bosch, 387
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U.S. 456, 465 (1967)).   Although the trust was a simple trust in

prior years, in 1994, it was a complex trust.       Accordingly,

petitioner was not required to report the undistributed trust

income.

3.   Addition to Tax

     Section 6651(a)(1) imposes an addition to tax for failure to

file a required return on the date prescribed, unless such

failure is due to reasonable cause and not willful neglect.

Petitioner failed to present any evidence relating to this issue.

Accordingly, respondent’s addition to tax for 1994 is sustained.

     Contentions we have not addressed are irrelevant, moot, or

meritless.

     To reflect the foregoing,


                                              Decision will be entered

                                         under Rule 155.
