Form 8606

[Kurly]

Mognin All:

I have a new client. He received a 1099R.

Box 1 $12000, Box 2a $12,000 (Taxable Amount), Box 2b Blank Box 7 Code 7 IRA/Sep/Simple

Form 8606

Line # 2 Basis of all Traditional IRA's 12/31/2006 $314,698. Line # 6 Basis of all traditional IRA's 12/31/2007 $319,763 , Line # 7 2007 distributions $12,000.

QUESTION: Does the Form 8606 Line # 15 (Taxable amount) supercede the taxable amount from Box 2a of the Form 1099R?

Thanks Much

Kurly

[Kurly]

Wow

24 lookie lous but no comments.

Maybe u r all doing research

Thanks

Kurly

[Gene V]

The reason you fill out Form 8606 is to calculate the taxable amount of the distribution. When the financial institution issue the 1099R, they
don't know if it is a deductible or nondeductible IRA. or how much would be taxable, so they show all of it is taxable, its up to us(the taxpayer) to keep track of what is taxable by using Form 8606.
Therefore, the simple answer is YES my calculation of line 15 is $617

[joanmcq]

You may want to ask him where that basis of $314698 came from. Its a little much (said with much sarcasm) even if he's been making nondeductible contributions every year. Also, its pretty close to line 6 which if FMV of all IRAs NOT basis. Lots of people confuse basis with FMV, and if he self-prepared in any year where the 8606 was a factor(or had a completely confused preparer) the basis was probably hugely inflated.