401k/ Stock Sale

[geekgirldany]

Client has a stmt from Merrill Lynch showing $19,653. Gross Proceeds on the sale of stock. Customer says this is from a 401K and they did not receive the money from it. It is all in the 401k. They told me this after I asked for teh cost of the stock. On another stmt that breaks down the sale it has a note that says "Capital Gains and losses in this statement are not reported to the IRS". While on the 1099B it says "Gross Proceeds and above transaction details from each of your 2004 trades are reported to the IRS."

They are saying it isn't taxable because it is in a 401K. Is this correct? Should it still be shown on Sche D? My brain is mush right now so I would appreciate any help.

Thank you

[Bird Legs]

401k 1099b

Weird. If this stock sale took place within the 401(k), no distribution of cash received from sale, then a 1099B should not have been issued. There should be tele. no. on the
1099B. You might call them to verify there were no distributions.
If there were no distri. then you might report the sale and show the cost as the same as
the sales price, leaving a 0 gain/loss.

[geekgirldany]

Thank you for replying. That is what I thought also.. that a 1099B should not have been filed. On the statement it has a column for Sale, Cost, Gain. Only the sale amount is listed. Customer says there was one last year. Which there was but it was not on a 1099B. It was only a annual stmt. This is what threw me off.

Thanks again

[jimmcg]

jim mcg

Certified letter to 401(k) trustee requesting a corrected 1099B might be in order if only to document your understanding of the alledged error... Still does not make sense, might make sure you have all the facts.