jasdlm Posted April 12, 2016 Report 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
jasdlm Posted April 12, 2016 Author Report 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
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