Reporting income lost for years then regained.

[AnnieProfit]

My client recently reclaimed escheat funds ($25,000) from her state unclaimed funds department (she paid $9,000 finder's fee, even though she could have gotten the funds on her own). The money consisted of some dividends, sale of stock from ESOP of her former employer, supposedly available to her in 1992. The financial firm which handled these matters claimed to not know how to find her at the time, and since her company was sold about then, she had no idea she had this income.
First, how do I establish basis and second, how do I deduct the finder's fee.
Thanks for any help.

[jainen]

tax consequences

>>client recently reclaimed escheat funds <<

That's an asset, not income. It might have been income in 1992, but she is protected by the statute of limitations (assuming she filed a timely return!) Since then, that money has been her property and she can claim it without tax consequences.

[AnnieProfit]

Recovery of escheat funds

Thanks for the help. Can you direct me to a publication or code sectiont that I can use to back this up?

[jainen]

you already know

>>direct me to a publication or code section<<

Sure. I assume you already know about the statute of limitations. Look up "constructive receipt" in The Tax Book or any other standard reference.