1099R for gold question

[JML222]

Hello,

Looking for direction with a unique situation.

Client presented a 1099R from a financial trust showing $85k gross distribution and $85k taxable with Taxable amount not determined checked and total distribution checked. Box 7 shows K7 (Distribution of IRA no FMV). Also no tax withheld. 

Client said the 1099R is for gold bars he and spouse purchased in 2009 for $65k and they took physical possession of the gold bars in 2011.  They currently have the gold bars in a safe at home. They do not think they ever received a 1099 related to the gold in the past.

Any direction how to proceed with this issue is appreciated.

TIA

[TaxGuyBill]

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@JML222 wrote:

Client said the 1099R is for gold bars he and spouse purchased in 2009 for $65k and they took physical possession of the gold bars in 2011. 

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Did THEY purchase the gold or did the IRA purchase the gold?

Was the gold "distributed" from the IRA to them personally?

Who issued the 1099-R? What did they have do with the gold purchase, holding and distribution?

[BobKamman]

The highest price for gold in 2009 was $1,096. The lowest price for gold in 2024 was $2,013. If your client is saying he only made 30%, he is confused.

[JML222]

Yes, I found a purchase order dated 5/28/2010 for $64795 with a comment - "hold for customer pickup" and an annual asset valuation sheet that is not dated and from a trust company showing $63405

The documents are sparse, it appears they took the money from the IRA and purchased the gold in 2010, Unfortunately the client is a senior citizen, disabled with cognitive issues and the documentation is limited.

[JML222]

A receipt shows he purchased the gold on 5/28/2010 and picked it up from a metals broker.

Client is disabled with cognitive issues so its difficult getting info from him and I can't connect the 1099R to anything else other than his comment it is for the gold. At this point, it might be for something else. 

Thanks!

[BobKamman · Accepted solution]

Or he might have sold it for half of what it was worth.  Check out the "trustee" who issued the 1099-R.  Do they take 15 years of fees when stored bullion is sold?

At one time, you could take physical possession of precious metals even though owned in an IRA.  Then they changed that.  Then I think they said you could only do it with coins.  The receipt from 2010 probably shows something that he still has, or that he sold years ago and forgot to tell you about.