Taxpayer had stock in a company, Rubbermaid, which was bought by Newell about seven or so years ago. Taxpayer never transfered the stock which consisted of a little paperwork which I offered help. What I told her was going to happen did. The stock was liquidated and turned over to state for unclaimed funds. My question is once she claims it how do we treat it? Anyone ever ran into this. Dividends about 80K and stock a little over 400K. Crazy!
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It sounds like you helped somebody way beyond a tax return. Not bad for a day's work.Originally posted by Bucky
The taxpayer owned the stock, the dividends went into the taxpayer's account, the tax should be paid on the dividends in the year paid by the corporation. I am curious how they accumulated. Was this person getting 1099's and paying tax along the way?
Other than the interesting circumstances, I don't see any effect of the funds having been turned over to the state.
Perhaps the dividends weren't paid out because the corporation couldn't find the shareholder. The tax should be paid when the dividends were paid out, but if the check kept being returned, I dunno.
That's also an interesting question regarding constructive receipt. Is it constructive receipt if you aren't aware of the funds?
Keep us posted. I'm interested in the details of this. Did the client know about the stock and dividends? Was it being paid into a trust? If the big amount ended up with the state, there must have been some kind of trust involved. Interesting. -
Yes Indeed
keep us informed, PLEASE! as this is very untested waters for me, and probably for most of here on TTB board.
The intriguing thing here is how the corporation issued 1099-DIVs, or alternatively, how they didn't issue them and the criteria for their decision. And if they issued them, how the taxpayer has gone all these years without IRS responding to underreporting.
At any rate, I hope there is no problem in getting this massive amount of wealth back from the state.
Regards, Ron J.Comment
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no 1099 div
The taxpayer never received 1099 div since the year the company was bought out by Newell. No trust involved. She knew she owned the stock and needed to do the transfer paperwork but never did. She obtained the stock from gifting and dividend reinvestment. I will keep you updated as I investigate further. The sad part is the state has a 5% fee for releasing the funds.Comment
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Taxation
When your client receives the money from the state the state will issue 1099 forms showing $80,000 of dividends and $400,000 of gross proceeds. So she will report and pay taxes on the $80,000 of dividends and the $400,000 less basis. Too bad the AMT is probably going to kick in, otherwise she might have come out ahead on the deal.Comment
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Game Late
1099's are usually still issued. Why would they not be sending out the 1099s to the same address they always had,they have the SS#, the name change meant the entiire account was held. I guess I had one of those, but the dividends were minor. Have you ever gone to the WEBsite and looked for your clients. I have the same ones always showing up there. Here in the 1,000,000 land of lakes and more taxes you can also check on deliquent taxpayers. A client that I got rid of 15 years ago was in there a couple of years ago. I have to admit it made me feel good to see him on the list. Shame on me.Comment
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