Ira Settlement

[GTS1101]

I have a client who orignally had a profit sharing plan through his company 15 years ago. He rolled it over to an IRA and it had a balance of 20,000. The company went under and he lost the whole IRA. There was a settlement in court and he received an 8,000 settlement. All the contributions into the IRA were with Pretax dollars. The court did not issue a 1099 or anything indicating monies received from the IRA. I am assuming the whole 8,000 would become taxable in 2007? If yes how would it be reported since there is no 1099? Other income on line 21?

Thanks!

GTS1101

[JoshinNC]

What company went under?

I have a client who orignally had a profit sharing plan through his company 15 years ago. He rolled it over to an IRA and it had a balance of 20,000. The company went under and he lost the whole IRA. There was a settlement in court and he received an 8,000 settlement. All the contributions into the IRA were with Pretax dollars. The court did not issue a 1099 or anything indicating monies received from the IRA. I am assuming the whole 8,000 would become taxable in 2007? If yes how would it be reported since there is no 1099? Other income on line 21?

Thanks!

GTS1101

The IRA custodian? I have not heard of any recent cases where an IRA custodian went under. And even if they did the underlying investments would still have value. This sounds fishy/strange/insert adjective. Ask more questions of you client.

[veritas]

Is this an MFS

settlement?