Discussion:1099R Distribution - worthless?

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Discussion Forum Index --> Basic Tax Questions --> 1099R Distribution - worthless?


Discussion Forum Index --> Tax Questions --> 1099R Distribution - worthless?

CAI (talk|edits) said:

5 May 2014
Client invested $70K - Pensco was the "holding" company of this. The money has dwindled down to $7,000 over the years. She did not pay Pensco $115 in fees in 2013 so they "resigned" on the account in October of 2013. In the meantime she is showing a $7,000 distribution (1099R) added to her taxable income. She received no money. They said they in essence transferred the holding to her (resigned).

She is claiming this investment to be worthless. Question - is there a way to show this as such (it is classified as an IRA on the 1099R) - making it non-taxable to her?

Kbairtax (talk|edits) said:

6 May 2014
So, what was the investment in?? Was it truly an IRA arrangement???

Spell Czech (talk|edits) said:

6 May 2014
What was your client's tax basis in the original investment?

Is she now holding something that had a value of $7,000 when she received it back in October?

CAI (talk|edits) said:

6 May 2014
It was tax deferred money. Originally came via a retirement plan that was rolled over to an IRA that was then rolled over to this Pensco "arrangement" The rollovers don't seem to have triggered any tax ramifications.
 The money in this Pensco account seems to have been then invested by a 3rd party

Spell Czech (talk|edits) said:

6 May 2014
From what you've told us so far, it seems like she should be holding something, now, that was worth $7,000 and was taxable to her when it was distributed to her in October of last year, and that may - or may not - have become worthless since that time.

The worthlessness isn't ours to decide, it's hers to demonstrate, sorta like.

Does she now have shares in a traded mutual fund (that were distributed to her last year) and is there a market quote for those shares at the end of 2013? If there's value there, what she's holding isn't worthless in 2013.

CAI (talk|edits) said:

14 May 2014
There is no indication she received anything of value at that time or otherwise.

Supposing that this was in fact the case, that she received nothing of any value. What would be the procedure to rectify this for filing purposes?

Spell Czech (talk|edits) said:

14 May 2014
The procedure would be to sue the custodian for the $7,000 worth of stuff they *didn't* send her.

Alternatively, you might go hunting - I don't know where - for whatever it was that she did receive but didn't notice or doesn't remember receiving.

Fsteincpa (talk|edits) said:

15 May 2014
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