Life and Death Planning for Retirement Benefits

zero as the amount of excise tax he owes, and the IRS later decides some tax was owed, it

is obvious that the amount “omitted” will always be more than 25 percent of the amount

shown on the return.

The Code provides a way out of this problem. “In determining the amount of tax omitted

on a return, there shall not be taken into account any amount of tax ...which is omitted from the

return if the transaction giving rise to such tax is disclosed in the return, or in a statement attached

to the return, in a manner adequate to apprise the Secretary of the existence and nature of such

item.”

Therefore, to keep the statute of limitations at three years instead of six years,

one would need to file (in addition to a return showing “zero” penalty owed) a description of the

“item” in the “return (or in a schedule or statement attached thereto) in a manner sufficient to

apprise the district director ...of the existence and nature of such item.” Reg

A statement could be attached to the return listing the retirement plans owned by the taxpayer, his

age, and other relevant facts, and explaining how the RMD was calculated (or why no RMD was

required).