Educational Credit

[vseals]

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.

[Bees Knees]

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.

[jainen]

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.

[Bees Knees]

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.

[Kram BergGold]

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?

[jainen]

I suppose

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

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

[Bees Knees]

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.