Level 3

Solved

1099B, but client says it's not taxable bc it's from 401K

Forum|Forum|4 years ago
March 2, 2022
3 replies
17 views

Client come to my office with 1099B showing capital Gain of $1,500.

But he says this's not taxable income and I should not report it on his tax return.

Because he said he used the money from his 401K account to invest on these stocks.

He did not withdrawn money from his 401K. All money he invested in this stocks still in his account.

He chooses to manage these stocks himself instead of the fund manager.

His age is above 59.5 years. He does not receive any 1099R.

Is there any case that you do not need to report 1099B on the tax return?

Can we just ignore 1099B because client says it comes from 401K fund that client never withdrawn?

????

Please Help!

ProSeries Professional

This topic has been closed for replies.

Best answer by qbteachmt

"Because he said he used the money from his 401K account to invest on these stocks."

A Self-Directed IRA, an HSA, etc, might get a 1099-B and need to file a 990-T, such as UBTI:

https://www.fidelity.com/tax-information/tax-topics/ubti

For instance, a Self-Directed IRA holding rental property with debt, has to report.

If your client's 401(k) is trading Stocks, all he did is forfeit capital gains treatment upon distribution, because it will be taxable income when taken.

If your taxpayer has a 1099-B issued to him from his own 401(k), either it is not reportable, or he doesn't understand what he did. Example: he borrowed from the 401(k) to invest in stocks with the same brokerage, and the 1099-B is in his personal name = reportable.

dascpa

Level 11

Absolutely. Always look at to whom the account is titled in. This applies to all 1099's and K-1's.

T

TTTAuthor

Level 3

This 1099B is under his name for the current tax year.

Am I wrong to report this 1099B on his tax return?

abctax55

Level 15

"...Can we just ignore 1099B because client says"

No, not just because of ANYTHING the client SAYS.

What is the ID number shown on the 1099-B? THAT determines where it's reported.

HumanKind... Be Both

S

singh

Level 6

I have been dealing with a lot of 1099B. As far as I know whether you withdraw or not, if you have capital gain from stocks it has to be reported. The summary page shows the proceeds, cost and gain.

qbteachmtAnswer

Level 15

"Because he said he used the money from his 401K account to invest on these stocks."

A Self-Directed IRA, an HSA, etc, might get a 1099-B and need to file a 990-T, such as UBTI:

https://www.fidelity.com/tax-information/tax-topics/ubti

For instance, a Self-Directed IRA holding rental property with debt, has to report.

If your client's 401(k) is trading Stocks, all he did is forfeit capital gains treatment upon distribution, because it will be taxable income when taken.

If your taxpayer has a 1099-B issued to him from his own 401(k), either it is not reportable, or he doesn't understand what he did. Example: he borrowed from the 401(k) to invest in stocks with the same brokerage, and the 1099-B is in his personal name = reportable.

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO