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    Educational Credit

    I have a client that cashed in $20,000 dollars from an investment. The financial advisor told
    them that their CPA would give them a form to complete that would defer filing this money
    as income/ and no penalty would apply. they rec'd a 1099 B and a letter from the IRS
    taxing this money that they didn't claim. Is their a form that I should have filed or that the
    financial advisor should have filed? They cashed this 20M and had no taxes withheld. Is their anything that can be done now? they did spent 9500 dollars of this money to pay
    college expenses. I didn't know about this money until they rec'd the IRS letter. Please
    advise.Thank you in advance for your help( they didn't have an Educational IRA, QTP or
    any ESA.

    #2
    Have your client contact a lawyer to file a malpractice suit against their financial advisor for giving tax advice without merit.

    There is no such thing as a tax deferral on money used to pay for education.

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      #3
      the advisor's advice

      >>a malpractice suit against their financial advisor for giving tax advice without merit<<

      Since the advisor's advice was to ask the CPA, I wouldn't call that malpractice. Besides, we can't assume that the withdrawal was taxable--maybe the advisor knew that $20,000 was less than originally invested.

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        #4
        Use of the term "deferral" in connection to any education provision in the tax code is malpractice, as it implies something very different than actual law. Unless of course the client is lying and attributing words to the financial advisor that were not said.

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          #5
          Whoa!

          I have a client that cashed in $20,000 dollars from an investment.
          What does this mean. To me it means they sold some stock and owe taxes on the difference between cost and sales price. If this was in some kind of tax defered account, then what kind?

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            #6
            I suppose

            >>attributing words to the financial advisor that were not said<<

            I suppose, there could be a first time for anything.

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              #7
              Originally posted by Kram BergGold
              If this was in some kind of tax defered account, then what kind?
              If it were in some kind of tax deferred account, there would be no 1099-B issued.

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