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Code K is a hint that you might just put taxable amount = zero. Make sure the client has clear evidence that the value truly was zero.
Are you stating the 1099-R is fraudulent and can prove it?
Yes, he did not get the money, the company lost his entire investment and then sent him a 1099-R as a distribution.
And that $115K was his original investment amount?
Yes that was his full 401k amount and that full amount was invested in 1 company.
Are you asking to deduct it or are you asking to not include it as income?
What would be the correct procedure? I input the 1099-R-but he did not actually receive this money, how do I show that? It was a loss of his entire investment, not a distribution.
I'm guessing we need Paul Harvey to sort this out for us.
If the "old" custodian was told to "invest/distribute" $115K to the "new/scammer" custodian, from "old custodian" perspective they made a distribution and issued a 1099-R. I won't bet too much that this is what happened, but Phoebe's shiny nickel bet comes to mind.
Could this be a rollover?
I wouldnt think so, there is no money left. But again Im not sure of the correct procedure in this case.
What is the code in box 7?
That is why @George4Tacks is asking about a rollover.
I was thinking indirect rollover. Shyster A distributes $150K to shyster B and issues a 1099R. Shyster B loses all the money and never distributes a 1099R cuz it's all gone.
https://www.irs.gov/newsroom/help-for-victims-of-ponzi-investment-schemes
Was either shyster investigated by the SEC? Do a google search for the individual and the SEC.
Code is K, 1
would I choose rollover and when he gets a notice from the IRS explain it all?
Code K is a hint that you might just put taxable amount = zero. Make sure the client has clear evidence that the value truly was zero.
Is box 2a filled in or is it empty?
Yes, taxable amount not determined is checked off....
Thank you everyone!
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