Discussion:Charitable Gift Annuity - brokerage reported stock sales to TP on 1099-B
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| Revision as of 19:00, 29 March 2008 Kevinh5 (Talk | contribs) (this might be it) ← Previous diff |
Revision as of 19:04, 29 March 2008 OR Taxman (Talk | contribs) (Thanks again, Ke) Next diff → |
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| + | {{ForumReplyPost|UserID=OR Taxman|Date=29 March 2008|Text=Thanks again, Kevin. I agree I have seen these posts on ethical issues. I hope I am not one of those types -- and a big reason I got my EA -- and an even bigger reason I read and ask here... | ||
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| + | Anyway, I know my client's beef is not with me. But he is elderly and was told one thing and another seems to have happened. My intention is to help him through this process, including approaching the church with him once we have the answer. | ||
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| + | I just read this post: http://www.taxalmanac.org/index.php/Discussion:Tax_Payer_died_and_Stocks_were_sold_in_her_Tax_ID - esp Jdugan's reply. Obviously the issue of the death of the taxpayer in this post and stepped-up basis are different but this is how my thought started along the lines as far as process for reporting to match the 1099-B with zero gain/loss and explaining that the stocks were transferred to the charity and then sold by them not by the TP. | ||
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| + | Again, thanks, if you have thoughts after looking at the post above, let me know; otherwise: everyone back to work!}} | ||
Revision as of 19:04, 29 March 2008
Discussion Forum Index --> Tax Questions --> Charitable Gift Annuity - brokerage reported stock sales to TP on 1099-B
| 5 March 2008 | |
| Client intended to transfer appreciated stock to charity in 2007 and establish charitable gift annuity. Client received 2007 1099-B from brokerage showing sales of these stocks. I'm thinking this reporting from the brokerage is not correct. My assumption is that the transfer of the stocks to the charity would not show up on a 1099-B to the taxpayer. Client did receive 1099-R from charity, with Box 7 code "F" and capital gains amount.
I'm checking with all the parties involved to see if I can get more details about the actual transaction but wanted to ask here if: 1) this sounds like an error on the part of the brokerage; 2) this could possibly be an error on the part of the client / charity in how they structured the transaction; 3) this is correct reporting and the 1099-B transactions should be handled in the client's 1040, related to the capital gains amount reported on the 1099-R? I think most of the transaction is correct but am concerned about this 1099-B from the brokerage. But maybe I'm misguided here... | |
| 29 March 2008 | |
| Here's the latest: Funds were not transferred to an account in the name/ID number of the charity. Charitable organization sent the brokerage a letter requesting redemption of the mutual funds and a check was sent to the organization. So that redemption triggered the 1099-B to taxpayer.
I have contacted the charitable organization, and they indicated they had intended to set this up so there was not a taxable event with regard to the mutual funds for the taxpayer. So I think I may be missing something on my end with respect to how to properly report the mutual fund transaction on the taxpayer's tax return. I'm thinking maybe report the sales with a basis in the amount of FMV so there is no gain on the taxpayer's Sch D with a statement explaining the contribution? But that doesn't seem correct. I'm still working on settling this issue if anyone has experience in this area, I still would value your input. Happy final 18 days all...counting 'em down! Hang in there everyone... | |
| 29 March 2008 | |
| You can't change basis just because the taxpayer "wanted" and the charity "wanted" it to be a non-taxable event.
You have to report it the way it happened, let the taxpayer pay the tax, and let him get angry with the charity for screwing this up. You have to be ethical and do what is right according to what happened. You can't ignore the information you were provided - they were sold while in his account. | |
| 29 March 2008 | |
| Thanks, Kevin. I'm not trying to be unethical here or change anyone's basis in their investment. I just don't know the answer and am exploring all the possibilities. I've been working under the assumption that the charity knew what they were doing here (without naming names -- this is an extremely large centuries-old international church organization). I assumed that the church has handled these transactions before, that the steps they took were the proper ones, and that the 1099-B reporting issues had been mishandled somewhere else. I'm getting closer to believing this may not be the case, but I'm not quite done looking. Sure does begin to smell like the charity messed up here in their actions, just seems so unlikely. I might end up punting to someone with specific expertise in this area if it looks like the charitable organization did mess this up. | |
| 29 March 2008 | |
| someone messed up and it is not your job to lie to fix it
it is your job to report it accurately | |
| 29 March 2008 | |
| I'm not sure why you make the assumption that any of the professionals on this board would consider it their job to lie to fix someone else's errors. I consider it my job this time of the year to accurately prepare tax returns for my clients, regardless of who messes up.
In this case, I am trying to confirm through this resource that an error has occurred here. Given the serious nature of this error, I'm looking for as much information as I can in an area that I believe is not that commonplace. I certainly am beginning to believe that an error has occurred in this transaction. If you're telling me that you have some expertise in the area of Charitable Gift Annuities (and from your profile and many other excellent posts, I think you might) and that you can tell from the information that I have provided that the charity messed this up; that the capital gain definitely should be included on the taxpayer's 2007 tax return; then I am inclined to accept that. So far the folks who I previously believed had the most experience in this matter -- the charitable organization -- are telling us they did it correctly, so I consider my job at this point, as a service to my client, to confirm these facts through as many sources as possible, including this board and possibly including another practitioner. I also consider it part of my job to assist this client, who believed the charitable organization handled this correctly, in understanding how it was messed up and what possible options he might have at this point. If the only option open to him is to pay the capital gains, then that certainly is an option that he will need to understand and deal with. I just don't think I should present my client that option and confront the church with this error until I am certain about the answers. | |
| 29 March 2008 | |
| oh I don't assume, I know that I have personally read SEVERAL posts from so-called professionals whose attitudes are to 'just do it because it will not be audited, move on'.
If you want to find these posts, just search on the term 'ethics'. I would hate to see any Enrolled Agent fall to that same level. | |
| 29 March 2008 | |
| I believe that the charity messed up, it will cost your client extra tax. His beef is with the charity, not with you. | |
| 29 March 2008 | |
| now that I have written that, if my memory serves me, there was a thread about 3 weeks ago or so that was supposed to be about a CRUT which turned out to be a charitable gift annuity, and there were some important points there that apply to your situation. | |
| 29 March 2008 | |
| this might be it | |
| 29 March 2008 | |
| Thanks again, Kevin. I agree I have seen these posts on ethical issues. I hope I am not one of those types -- and a big reason I got my EA -- and an even bigger reason I read and ask here...
Anyway, I know my client's beef is not with me. But he is elderly and was told one thing and another seems to have happened. My intention is to help him through this process, including approaching the church with him once we have the answer. I just read this post: http://www.taxalmanac.org/index.php/Discussion:Tax_Payer_died_and_Stocks_were_sold_in_her_Tax_ID - esp Jdugan's reply. Obviously the issue of the death of the taxpayer in this post and stepped-up basis are different but this is how my thought started along the lines as far as process for reporting to match the 1099-B with zero gain/loss and explaining that the stocks were transferred to the charity and then sold by them not by the TP. Again, thanks, if you have thoughts after looking at the post above, let me know; otherwise: everyone back to work! | |
