Stock escheated by state

[Kram BergGold]

In late 2010 the unclaimed property division took my clients ATT stock. I can approximate the amount of dividends earned in 2011based on 2010. Should I do this or is this not considered income received until the State gives it to her in 2012 or later?

[DaveO]

Assuming she is an individual and therefore a cash basis taxpayer I would say that until she gets the cash she does not have constructive receipt.

[Brilliant]

I agree with Dave0

[Burke]

In late 2010 the unclaimed property division took my clients ATT stock. I can approximate the amount of dividends earned in 2011based on 2010. Should I do this or is this not considered income received until the State gives it to her in 2012 or later?

Did AT&T report divs for 2011 to IRS under client's SSN? How can a state take the stock? They can only take the unclaimed income, and that doesn't usually happen for years.

[Snaggletooth]

What State?

Mark, this is unbelievable! Is it your state (Taxachussetts?)

We have a owner whose identity is known well enough for AT&T to be paying dividends in 2010, but suddenly no one knows the owner except YOU?

What am I missing here??

[ChEAr$]

Mark, this is unbelievable! Is it your state (Taxachussetts?)

We have a owner whose identity is known well enough for AT&T to be paying dividends in 2010, but suddenly no one knows the owner except YOU?

What am I missing here??

Actually not so hard to believe. In this day and age when people move and either leave no forwarding address, or fail to leave change of address cards, maybe in this case the brokerage company who held the ATT stock in street name, it's possible that broker didn't have address and had to send every thing, lock, STOCK, and barrel to the state.

[Kram BergGold]

Maybe a mis statement

Maybe the state did not take the stock but just the dividends. So I won't report them.

[Burke]

I still think you need to find out if AT&T reported them under the client's SSN. The IRS would be trying to match to the return. Usually these are cases where the checks are sent out to the last known address, returned by the P. O., and after a time the funds have to be sent somewhere by the company. As I said, this takes years. I am surprised the TP hasn't gotten CP2000's along the way, because they would still be sending out the 1099-DIV's as well to the stockholder. And I am not so sure it wouldn't be considered constructive receipt, since the dividends were paid, checks were issued, and the funds were available to the taxpayer had they ever contacted the company to provide the correct address.

[ChEAr$]

Just because the dividends are unclaimed property, does not mean that ownership and rights to the dividends are forfeited. Taxpayer needs to report the dividends.

[Burke]

I agree with that succinct answer. And reported in the year of issue, not all at once when they actually do receive the back payments.