fredazcpa

Cllient missed RMD for 2007, even after they were told by me, in writing, and the IRA trustee and they have been doing for several years now.

which year is the penalty reported in, in 2007 or in 2008 (when the money is taken out) and should the client pay the penalty first then request it back with their excuse as to why they missed it (death in December of family member, not the spouse)

thanks for your input

Fred

Sounds like a preparer around here that was busted for fraudlit returns, you just might point this out to your friend that if the prepare gets busted, then all his/her returns are open for a long time

You are correct, IRS CODE Sec 401(a)(9) is the RMD rules, for a non spouse beneficiary, the must begin RMDs based on Beneficary by December 31 of the year following IRA owners death, OR entirely disributed by December 31 of the fifth year following death,

Sounds like the started but did not following though, I would say pull the balance be the end of the year, pay the tax

Run the pay check, with the deduction and buy all means press the charges, she/he has more than likely done it before or will do it again

K.C.

I actually have statements that were issued to my client, and when I compare starting value, ending value, and what he took out it appears correct.

I would love to have him contact the issuer, unfortunately my client is now deceased and his son his handleing his affairs. When ask even simple questions, he has no clue.

May be I'm just not seeing things right. Let me show you exactly what he ending statement for 12/31/06 states.

It shows contract value on 12/31/2005 as 0.00

Total Payments as $250,000.00

Total withdrawls of $21,060.00

Surrender value on 12/31/06 as $230,735.99

Death benefit on 12/31/06 as $246,834.94

Contract Value on 12/31/06 as $246,834.94

I don't know where I originally thought this annuity was for $400,000.00 because the paperwork is definitely showing $250.000.00. He probably used the other money from the life insurance proceeds for other things and only invested $250,000.00 in this annutiy.

Again thanks for your help, and I sure hope all is well with your husband. I've been on vacation for the past 10 days so I haven't been reading many posts. But you both have been in my thoughts!

Deb!

Hope this will help, with an annuity when you take a "withdrawal" the earnings are taken out first then if the withdrawal amount is more that earnings, then the principal is taken. the 1099R you show a total withdrawal of $21060 and the taxable amount of 17K, this is what the insurance company had paid to the contract at the point of the withdrawal. The Surrender value is the cash you get out if your client surrender the contract and took all the money out. the differance between the contract value/death benefit would be what is left of the principle and maybe some earnings.

if the contract is annunitzed then each payment is a return of principle and earnings.

Thanks Eli that was very helpful

Thank you, will be very helpful with the short sales that are happening in the Arizona real estate market.

Obviously I should have been a lot more specific. He is 69 and took the money from the sale of the stock out of his 401K.

I thought the entire amount from the sale would be retirement income, he thought only his original buy would be and the profit would be capital gains. He is going to be one unhappy camper when I give him that news.

Thanks for your input Joan and Tom.

Margaret

If the stock is from his company and he has any left in the 401K, look into how you handle Net unrelized gain, you transfere the stock out, pay tax at basies, then sell out side of 401K pay cap gains tax on the difference

Thanks to all

Glad I didn't become a helicopter pilot or I would be dead by now but I'll get the hang of it!

taxbilly

And I was thinking to taking flying leasons

Taxpayer, new to me , filed and extension for them April 16, husband passed away last Saturday, can wife still efile this years (2006) return?

thanks

Fred