Changing broker

[ILLMAS]

TP changed broker in 2008, she recieved a 1099-B showing the day the stocks where exchanged, fast foward to 2010, clients gets a letter from SS, saying they are going to lower her benefits because her AGI was 89K in 2008. I called the IRS and requested a transcript and I can clearly see that the stocks that were supposed to be transfered or exchange appears if they were sold. TP cost was higher then the sales price so she has a loss, but I am just wondering if the way the first broker handled the transfer was incorrect. TP never recieved a check from the proceeds, your thoughts?

Thanks

MAS

[ILLMAS]

Never mind, TP called hes broker and was told you cannot go from mutual funds to stocks, that you can only transfer to the same type of investment. Works for me.

[Don in Upstate NY]

... client gets a letter from SS, saying they are going to lower her benefits because her AGI was 89K in 2008 ...

Having a higher AGI in 2008 would not reduce her SS benefits. It could increase her Medicare premium however, which would result in a decrease in her monthly check. If the increase in AGI is a one-shot deal, she might be able to get the Medicare premium reset to its normal amount by contacting her SS office. See this link.

[Randall]

Never mind, TP called hes broker and was told you cannot go from mutual funds to stocks, that you can only transfer to the same type of investment. Works for me.

You should check a little further. You can have a 'in kind transfer'. That is, you can own Stock A and Mutual Fund B and have them transferred from one brokerage account to a second brokerage account without selling the investment. You still own Stock A and Mutual Fund B, it's just held in a different brokerage account. If the client wanted to changed investments from a mutual fund to a stock, a sale of one and a purchase of the other would be needed. The cash from the proceeds could have then been transferred to the 2nd account and the client would not have received any money. With a sale, a 1099B would be generated and proceeds would have to be reported on the tax return (minus basis giving a gain or loss). If there is no gain, AGI wouldn't be affected, but if this wasn't reported, the IRS would be using the gross proceeds from the 1099B and showing AGI higher.

[taxxcpa]

Your social security is not reduced because your AGI is over $89K or even if it is over $ 89 million, unless it is "earned" income and you are under the age for unlimited earnings.

[Lion EA]

But, see Don's explanation above of why the monthly checks are smaller.