jasdlm Posted April 12, 2016 Report Share Posted April 12, 2016 Client is sole beneficiary of a Trust. Trust was beneficiary of a qualified plan. Trustee completed the 'wrong form' and withdrew the entire $900K in one tax year. Obviously, beneficiary paid a high price for this error. Beneficiary won $100k settlement in the case. I keep talking myself out of it being taxable (tax was already paid on the $900k), but then I analyze it again and decide that it is taxable because it is, in a sense, replacement of loss in value of property and does it exceed the value of her adjusted basis. Any thoughts? I can't find a publication on the IRS website that specifically refers to tax reimbursements. Thanks. Quote Link to comment Share on other sites More sharing options...
jasdlm Posted April 12, 2016 Author Report Share Posted April 12, 2016 One more thing: payor issued a 1099-Misc with proceeds in Box 7 - how in the heck could that be? Quote Link to comment Share on other sites More sharing options...
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