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Posted by DORFMONT@aol.com (Linda Dorfmo on June 6, 2006, 7:10 am
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Dick Adams wrote:
> In 1973, friend of mine issued a stock certificate for 5% of
> his C-corp to a vendor in return for a line of credit and an
> annual credit of $1,000 for five years. He ran this business
> until sometime in the mid-80's and just dropped out of sight.
> I spoke with him once in about 1995, but have no idea where
> he is today.
>
> The vendor died and her executor found the stock certificate
> amongst her papers. My name appeared in her notes because I
> was helping my friend set up this transaction. The executor
> got my phone number from my friend's brother (who told him I
> was now a CPA) and called me yesterday. He asked what I knew
> about the value of the stock. That was easy. She paid $5000
> for it and it is now worthless.
>
> He wanted to know how to account for it on her estate tax
> return. I told him he needed to discuss that with an estate
> tax professional. (I refrained from saying "How the hell
> would I know.")
>
> For my own knowledge: If you have stock that is worthless
> because the company went out of business, do you have to sell
> it take the loss, take the loss in the year the company
> went out of business, or pick the year you take the loss?
This is exactly what happened when my father died. He bought
stock in the Stardust Hotel in Las Vegas back in the 50s and
the certificate was still around. I took it to one of his
brokerages and deposited it into his account there. The
brokerage told me the stock was worthless. The E & P
attorneys gave me no trouble about this. I would expect that
the IRS attorneys that look at the 706s would accept any
evidence that the corporation was defunct including a page
out of the corporate register for the state showing no entry
for the corporation in question or showing it suspended or
dissolved.
Linda Dorfmont E.A., CFP, CSA
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<< and does NOT constitute legal OR professional advice. >>
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Subject: Withdrawing from a Non Qualified Variable Annuity Before Age 59 1/2
Newsgroups: misc.taxes.moderated
Approved: rdadams@smart.net
Precedence: first-class
Organization: (none provided)
Two years ago, my uncle was sold a fixed variable annuity.
It paid some teaser interest rate (the bait that Uncle took)
but now is paying a paltry 3.45%. I cannot move the
investment to an equity sub-account or anything like that.
It's stuck at 3.45%. Buying the product was a mistake but
not of major proportions, but I was not consulted at the
time. Anyway, Uncle recently gifted the annuity to me.
Upon transfer of ownership, the insurance company who wrote
it told me that they would 1099 my uncle (next January) for
the earnings to date. Not very much and Uncle is in a low
tax bracket so this is not a problem. Uncle is 88.
There is a lockup period on the annuity where a big penalty
(from the insurance company, in addition to any tax
penalties) hits if you withdraw. Some of the money recently
became unlocked, so I withdrew it. The rest comes unlocked
in a year. I am 47 years old. A few questions:
1. I assume my basis will be what it was on the day of the
gift, since Uncle will be paying taxes on all earnings thru
that date. (?)
2. What is the penalty for me withdrawing all or part of the
annuity before my own age 59 1/2 ? And what form do I report
all of this on? And if one is disabled, is there an
exception to the IRS penalty? And if so, what for do I
report THAT on?
It's just a bad investment that I want to close out as
quickly and as cheaply as possible. I think I need to wait
for the "lockup period" to end at the very least. But even
beyond that, what are the implications of all of this?
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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