Extension

[chadw]

Client thought he was rolling over a 401k to an IRA. brokerage firm told him it was in an IRA and client thought everything is just fine. Low and behold, in March he recieved a 1099-R with the whole thing taxable.

We gave the brokerage firm a call and they fessed up and apologized for the mistake.

We have since asked for an extension of the 60 day rollover from the IRS. The firm provided a letter stating it was their error and that they would immediately put the funds in a qualified IRA if granted the extension.

In the mean time, we haven't received feedback yet from the IRS and with the 15th tomorrow, there is a large potential that this client will owe a ton of money as this is a large sum of money and he is also subject to the 10% penalty.

We are going to file an extension, but do we show the large amount due or the refund (if we are granted an extension to roll over) on the 4868.

Client doesn't have the money to pay the tax unless he takes the money from the account. He doesn't want to do that unless he isn't granted the extension.

Do we show the lower tax amount on the extension or the larger amount to be safe?

[michaelmars]

thats a tough call but depending on the clients comfort level i would file the ext without the extra funds and let the bank know they are liable for int and penalies unless they get you a corrected 1099r by 4/15