Hardship

[ILLMAS]

Client of mine called today to ask me if she can avoid paying taxes from sale of stocks because of hardship, I did a quick research on the IRS website and it seems it's only for some retirement plans. Based on what I found I told her no, sale of stock is subject to tax if there is a gain on the sale, then she tells me her co-worker sold some stock and used hardship to avoid paying tax. So I am asking to see if someone knows if hardship can be used for sale of stocks?

Thanks

[mlinder42]

There is no hardship for stock sales. In this market how big can the profit be?

[ILLMAS]

Thanks, I think her concern is that her employer gave her the stock a while ago, so her cost basis is zero unless it was report as income to her, which I doubt happen.

[jainen]

>>it's only for some retirement plans<<

No, hardship is never a factor to avoid taxation with any retirement plan. Never.

>>her co-worker sold some stock and used hardship to avoid paying tax<<

Yes, in terms of paying taxes hardship can sometimes be a factor for IRS collections. Sometimes.

[Accountant33]

Was the stock from ESOP? Check those rules for handling it. But....no such thing as 'hardship'. Nice try on her part. I am forever amazed at the things people come up with and expect us to waste time researching their wishful thinking. Or wasting too much time trying to explain why it just ain't so and get to listen to their tirades about taxes & gov.

[zeke]

Simple - have the co-worker prepare the return!!!

z