2007 F 2439 Red'd 1/2/09

[erchess]

Ok I am one puzzled EA.

Client received from TD Ameritrade Clearing Inc as Nominee a 2007 Form 2439 on 1/2/09. The form does not indicate what RIC or REIT caused this. I didn't know the client had a RIC or REIT although he does own one mutual fund if that's a RIC. The EIN of the RIC or REIT is given so I guess I can find out who it is if I need to. Box 1a shows $373.95 undistributed LTCG and box 2 shows tax paid by the RIC or REIT as $130.90 and there are no other money boxes with numbers in them. The instructions on the back say that the taxpayer is supposed to report box one on Sch D and box 2 on F1040 l 70.

What I am left wondering is whether to keep this for the taxpayer's 08 or amend 07. The instructions say (as I understand them) that it depends on which of the taxpayer's taxable years contained the last day of the payer's taxable year. It looks like to me Ameritrade could have given us that information but it seems not to have done so.

Any advice??

[JG EA]

1. Does it say the company had a different year "or other tax year of the regulated investment company (RIC) or the real estate investment trust (REIT)" perhaps ending in 2008?

2. If it was a calendar year 2008 I doubt they would have it done yet.

3. Have you checked the result on 2007 if it turns out to be 2007? Perhaps they'll get a refund.

This amount is the tax paid by the RIC or REIT on the
undistributed long-term capital gains shown in box 1a. You can
apply for a refund or credit of this tax as follows.
Individuals, Nonresident Aliens, and Estates and Trusts.
See line 68 of Form 1040, line 63 of Form 1040NR, or line 24f of
Form 1041, and the related instructions.

[erchess]

Correction - I can't read

The name of the company IS given it just started with an A and I thought it said Ameritrade. It is American Capital LTD. Those of you who follow the stock market may be aware that AC is currently facing at least two class action lawsuits for not revealing things it should have revealed to prospective investors. AC is a REIT formed in 2008 to invest in government guaranteed mortgage backed securities. It trades on the NASDAQ, ticker symbol ACAS.

The 2439 says "For calendar year 2007 or other tax year of the regulated investment company (RIC) or the real estate investment trust (REIT) beginning _________, 2007 and ending __________, 20_____."

Since the other year part is not filled in does that mean it is for calendar year 2007?

If indeed it is for the client's 07 return a very small refund will apply, but it won't cover my fee.

[joanmcq]

Yes, calendar year 2007....just like it says at the top of tax returns.

[erchess]

Confused

Any ideas why it did not come out before the deadline for filing 07 returns?

If the bottom line on the Amend were that the client owed would there be interest and penalty or could I get those waived based on the circumstances?

TY everyone for helping.

[taxea]

I think the tax year should agree with the year the client got the refund from them.taxea

[erchess]

ummmmm what refund?

The client did not receive money at all. The client received on1/2/09 a notice that in 2007 a REIT retained some capital gains that were taxable to the client and paid enough to the IRS on behalf of the client that he gets a refund from the IRS that is larger than his balance due to NC.

[dkss]

my client received one also

One of my clients just brought in the form 2439. It is from National Financial Services LLC as nominee for American Capital Ltd. My clients form 2439 shows a beginning tax year of Oct 1, 2007 and ending of Sept 30, 2008. National Financial Services also attached a "Buck Slip to Accompany a 2007 Form 2439" which states:
American Capital Ltd (CUSIP 02503Y103) recently issued a 2007 "Notice to Shareholder of Undistributed Long-Term Capital Gains (IRS Form 2439)" for its tax year ended September 30, 2008. They have used a 2007 Form, because their tax year began in calendar year 2007. However, the company indicated that shareholders should include the information on this 2007 form 2439 in their 2008 returns -- 2007 returns do not need to be amended.

[erchess]

Very Interesting

Thank you for that input dkss. Reactions from the peanut gallery?

[taxea]

If they received the form then, technically, they received the "undistributed funds". taxea

[erchess]

Taxea or anyone

Ty taxea for the clarification. I do see your point now and we are in agreement. This is money the taxpayer never got but is required to pay tax on and it is to be hoped that in the long run he will get a bigger payout because of the use the company has made of the money. Meanwhile the company has at least paid the additional tax and then some.

Having read the post by dkss does anyone disagree with my holding this matter for 2008 instead of Amending 2007? I realize that if that is the proper treatment information was left off of the Form about their taxable year.