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Subject Author Date
Corrected form 1099 MrTom 04-25-2008
---> Re: Corrected form 1099 removeps-groups...04-25-2008
Posted by MrTom on April 25, 2008, 6:32 pm
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 Today I received a corrected consolidated form 1099 from ETrade. The
changes were

An increase of $2.46 in Interest Income.

A decrease of $7.35 in both Total Ordinary Dividends and Qualified
Dividends.

An increase of $4.89 in Cash Liquidation Distributions.

Do the IRS and/or the state of California care about such minuscule
changes? Must I, or should I, file amended returns? How should I
handle this, what would you do?

Thanks.

Tom

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Posted by removeps-groups@yahoo.com on April 25, 2008, 7:35 pm
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> An increase of $2.46 in Interest Income.
>
> A decrease of $7.35 in both Total Ordinary Dividends and Qualified
> Dividends.
>
> An increase of $4.89 in Cash Liquidation Distributions.
>
> Do the IRS and/or the state of California care about such minuscule
> changes? Must I, or should I, file amended returns? How should I
> handle this, what would you do?

No, it doesn't matter. The cost of processing time to both you and
IRS agents is not worth it. BTW, assuming the liquidation
distribution is not taxable (ie. is just a return of your capital, or
in other words the basis in the stock was more than $4.89), the effect
of the above is to reduce your ordinary income by 7.35-2.46=4.89. It
seems ETrade is re-characterizing dividends as interest and
liquidation. For incomes under 100k, the taxable income is rounded to
the nearest $50; for example, all taxable incomes 50000 to 50050 have
a tax of 8930, so if your taxable income was 50040 before the amended
1099, your income after is less but yields the same tax. But if you
dropped to the previous bracket, your tax would be 8918, and you would
get $12 back. If your income is over 100k, you would get back about
0.28*4.89.

Now if you ever have to amend your return for other reasons, then be
sure to include the reduction of $4.89, otherwise don't worry.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by MrTom on April 26, 2008, 2:20 pm
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removeps-groups@yahoo.com wrote:
>
>> An increase of $2.46 in Interest Income.
>>
>> A decrease of $7.35 in both Total Ordinary Dividends and Qualified
>> Dividends.
>>
>> An increase of $4.89 in Cash Liquidation Distributions.
>>
>> Do the IRS and/or the state of California care about such minuscule
>> changes? Must I, or should I, file amended returns? How should I
>> handle this, what would you do?
>
> No, it doesn't matter. The cost of processing time to both you and
> IRS agents is not worth it. BTW, assuming the liquidation
> distribution is not taxable (ie. is just a return of your capital, or
> in other words the basis in the stock was more than $4.89), the effect
> of the above is to reduce your ordinary income by 7.35-2.46=4.89. It
> seems ETrade is re-characterizing dividends as interest and
> liquidation. For incomes under 100k, the taxable income is rounded to
> the nearest $50; for example, all taxable incomes 50000 to 50050 have
> a tax of 8930, so if your taxable income was 50040 before the amended
> 1099, your income after is less but yields the same tax. But if you
> dropped to the previous bracket, your tax would be 8918, and you would
> get $12 back. If your income is over 100k, you would get back about
> 0.28*4.89.
>
> Now if you ever have to amend your return for other reasons, then be
> sure to include the reduction of $4.89, otherwise don't worry.
>

Thanks so much for confirming my thoughts on this.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Mark Bole on April 26, 2008, 2:53 pm
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removeps-groups@yahoo.com wrote:
>
>> An increase of $2.46 in Interest Income.
>>
>> A decrease of $7.35 in both Total Ordinary Dividends and Qualified
>> Dividends.
>>
>> An increase of $4.89 in Cash Liquidation Distributions.
>>
>> Do the IRS and/or the state of California care about such minuscule
>> changes? Must I, or should I, file amended returns? How should I
>> handle this, what would you do?
>
> No, it doesn't matter. The cost of processing time to both you and
> IRS agents is not worth it.

Which begs the question, why does the financial institution bother, and
do they bother sending these changes in to the IRS? Who is paying all
the overhead costs for this, if it's not necessary?

-Mark Bole

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Seth on April 27, 2008, 6:45 pm
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>removeps-groups@yahoo.com wrote:
>>
>>> An increase of $2.46 in Interest Income.
>>>
>>> A decrease of $7.35 in both Total Ordinary Dividends and Qualified
>>> Dividends.
>>>
>>> An increase of $4.89 in Cash Liquidation Distributions.
>>>
>>> Do the IRS and/or the state of California care about such minuscule
>>> changes? Must I, or should I, file amended returns? How should I
>>> handle this, what would you do?
>>
>> No, it doesn't matter. The cost of processing time to both you and
>> IRS agents is not worth it.
>
>Which begs the question, why does the financial institution bother, and
>do they bother sending these changes in to the IRS? Who is paying all
>the overhead costs for this, if it's not necessary?

They're required to get it correct. And they might have some
customers with 1000 times the position, for whom it does matter. (And
the largest part of the cost is the snailmail, sending lots of data to
the IRS is cheap.)

Seth

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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