Level 2

Question

How do I change the taxable amount in box 2a on 1099-R to the fair market value from the gross distribution?

Forum|Forum|2 years ago
April 19, 2024
2 replies
20 views

I have a situation where a client invested IRA funds into a partnership which went bankrupt. The IRA custodian is now distributing the partnership interest to him in a distribution. The gross distribution is the amount of his capial account ($60,571). The taxable amount in box 2a is the same $60,571. Box 2b shows the taxable amount is not determined & this is a total distribution. Box 7 shows codes 7 (normal distribution) & K (distribution of an IRA no available FMV). The fair market value of this is zero. But I am unable to figure out how to code this in order to make $1 of taxable distribution work. The software insists that the gross distribution is the $60,571. How do I make this so that the taxable amount is $1 & flows properly through the return?

This topic has been closed for replies.

qbteachmt

Level 15

How did the investment get made: a ROBS?

What makes only $1 taxable?

Where is the distribution going, physically?

Don't yell at us; we're volunteers

sjrcpa

Level 15

@qbteachmt There is no distribution. The partnership interest is worth -0- now and in fact no longer exists.

Taxpayer must have had a self-directed IRA that allowed for investment in a partnership.

When a nonpublicly traded IRA investment goes belly up, the IRA custodian reports it as a distribution at the last known amount - usually cost. I don't know why.

The more I know the more I don’t know.

qbteachmt

Level 15

"There is no distribution."

Exactly. I was trying to get clarity on how this was worded vs reality.

"The partnership interest is worth -0- now and in fact no longer exists."

Yes, that sometimes happens.

"Taxpayer must have had a self-directed IRA that allowed for investment in a partnership."

Or it was within the new company's plan. That's what I was trying to learn.

"When a nonpublicly traded IRA investment goes belly up, the IRA custodian reports it as a distribution at the last known amount - usually cost. I don't know why."

People don't realize you can't report losses from IRA accounts and there is no "gain/loss" process. It's income, or nothing. All of a sudden, people are investing in BitCoin and income-sheltered annuities inside of their IRA, and then they wonder why they can't afford to retire.

Don't yell at us; we're volunteers

sjrcpa

Level 15

Good luck with this.

I would enter Taxable amount as -0- and attach an explanation.

Prepare for notices.

I had a situation just like this.

It took several years to resolve, during which IRS levied taxpayer's bank account. I had been working with IRS and then Taxpayer Advocate. Taxpayer eventually had to go to his Congressional Representative's office.

The more I know the more I don’t know.

N

n3stefaniakAuthor

Level 2

Good luck is right! Any number that I input is not taken into account in taxable income. The tax return continues to use the $60,571 gross distribution as the taxable income. I can't even use the software to file the "correct" return because the numbers don't flow correctly. That is my problem. I don't know if there is some other code that I need to input to get the numbers to work, but the software doesn't allow me to change the taxable income.

T

Terry53029

Intuit Community Champion

On the 1099R worksheet zoom to enter TP basis, and if you enter the same amount as in box 1 the program will make it all not taxable

Sign up

Login with SSO

Let's get you signed in

Login with SSO