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1099-R coding question

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    #1

    1099-R coding question

    Hope the season has not gotten the best of everyone yet..that said, this one has me a little flustered..

    Client received a 1099R with a code of 1..Gross distribution and taxable distribution box had same amount and taxable amount not determined was checked.

    The amounts were actually sent by the bank to an investment firm, client never touched the funds.

    Bank indicated that a Form 5498 will be filed in May showing the contribution.

    Question I have is when entered in the return, the code of 1 indicates a taxable distribution but then it is my understanding the 5498 mitigates this taxability. So with respect to showing the distribution on the return, is it reflected as a rollover even though the 1099-R does not address it that way?

    And presuming I file the return tomorrow and my client is entitled to a refund with the distribution showing as a rollover, will the IRS come back and indicate that it is a taxable distribution, adjust tax and say the client owes since 5498 not filed until 5/08?

    An issue since we are talking about $800K on the 1099-R..

    Thanks in advance

    Dale Cooper
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    #2
    If it was a direct roll over you need to report as shown on form and then make an adjustment. There should be a place in your software that allows you to do so. It doesn't matter when form 5498 is filed as long as this was done within the time limits in 2007 and the full amount was rolled over.

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      #3
      You might have the client bring in the statements original trustee and the bank showing the transaction. As long as the new account is titled as an IRA and the 60 day limit is met, you're good to go.

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        #4
        Thanks..jsut wanted to get clarification..I'll make the adjustment on the tax return to show the rollover and tell my client to be on the lookout for the 5498.

        As usual, thanks for the comments..

        Comment

          #5
          Same thing happened to one of my clients

          Fortunately, it came from the company I work for. Told Accounting that I needed a corrected 1099R ASAP and why. Got one within the week and happily sent the return on.

          Peachie

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