Taxpayer received 1099-SA form for a small distribution on an old, never used MSA account that an employer had established 7 years ago. However, he never got the money, instead the check went to the State as unclaimed property. It beats me how MSA bank was able to send tax form but not the check. Client will claim in 2013. I assume this is taxable in 2012, or at the least, in not worth any effort to try to tax in 2013? If he never gets the money than he would have a bad debt?
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That's hilarious how the 1099-SA showed up but not the check.
Can they claim the funds from the state? If they can't get it back, I'd report a loss to offset the distribution. -
Not sure they would be able to send a check just because it was an old account. Doesn't the owner have to request it since it was an MSA? They could have warned him though of what would happen.Comment
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