Conference nyoss1::market_investing

    I have two questions about IRAs.

    My wife left her job in 1995 and transferred all of her 401(k) funds to
    a Vanguard rollover IRA account.  She received a Form 1099-R from her
    ex-employer that listed the rollover amount in box 1 (Gross Distribution)
    and .00 in box 2a (Taxable Amount).  On the Form 1099-R it says "Report
    this income on your Federal tax return".  So how do I report this?  She
    shouldn't have to pay any tax since 100% of the distribution was rolled
    over into the new IRA.

    Another question: I opened a non-deductible IRA (with after tax money),
    how do I report this to the IRS?

    thanks,
    -dave

I think the instructions on 1099-R to "Report this income on your Federal 
tax return" only applies to box 2a (Taxable Amount), which you say is $0.00.
In other words, you can forget it.

To report your non-deductable contributions to a IRA, you fill out form
8606 and tuck it in with your 1040.  It's a very simple form if you aren't
taking any distributions.  Basically three numbers:

 1- Last Year's non-deductable Balance (Basis)
 2- This Year's non-deductable Contribution
 3- New Balance

You will have to do this every year you make non-deductable IRA contributions,
so the IRS can keep a running balance of your IRA money which has already
been taxed.

Hope this helps.
-tom-

    re: .1  The taxable amount is .00 so .2 is right. To make
    
    it even clearer that this is a rollover, you should let the trustee
    (bank or whatever) rollover the money directly to the custodian
    of your IRA money. That way you never get possession of the money
    and you have no problem.  However, if you do get a check,
    and immediately rollover the whole amount, be aware that you can
    only do this once in a twelve month period. This happened
    to a friend. He had 2 CD's mature and "rolled" them over to a
    mutual fund. However, since the bank cut a check with his name
    on it each time, the IRS says the second one is a "premature
    distribution" and is subject to tax and penalties. There are lots
    of little gotchas like this, so everyone reading this file should
    always consult a tax account, CPS or other professional.
    

    The sales load of a mutual fund, do I include that when I calculate my
    gains or losses?
    
    - Vikas

I sold some stock as a loss on 29-Dec.
the settlement date was something like 2-Jan, due to the weekend
and holiday in between.

the $64,000 question is:

	when does the IRS think i sold it?  29-dec (when i actually sold
	the securities) or 2-Jan (when i got the money credited to my acnt)?

> I sold some stock as a loss on 29-Dec.
> the settlement date was something like 2-Jan, due to the weekend
> and holiday in between.
> the $64,000 question is:
> 	when does the IRS think i sold it?  29-dec (when i actually sold
> 	the securities) or 2-Jan (when i got the money credited to my acnt)?

	Effectively the date of the transaction.

	See IRS Pub.'s 550 and 525 for more detailed info.

  While doing my taxes, I found out that the rules for capital gains (Sched. D)
may have changed since the tax forms went to press. The instructions said to 
ask for publ. 553 to find out. I would rather not wait for a mail order to get
this info, and I have not figured out how to get the booklet on-line. (I will
keep trying and may succeed, but in the meantime...)
  Can anyone give me a quick answer re whether the rules for capital gains shown
on the tax forms are still in effect?

> Can anyone give me a quick answer re whether the rules for capital gains shown
> on the tax forms are still in effect?

	I guess you don't follow the national news? :-)  the capital gains
	cut is part of the proposed/supposed "balanced budget" from the
	Republicans, which is still deadlocked ......

	ie. no change yet.  the next chance for it is in the next step-gap
	bill to raise the debt limit before the government has another
	change to default for the first time in history came later this
	month.  Some Republicans have recently gone on record as saying
	they now realize asking for tax cuts (which includes the cap.
	gains cut) at this time is not a good idea.

	On the other hand, rumors last month or so said Clinton was warming
	up to a pared down cap. gains cut.  So who knows....

	.... however at this exact moment I don't think we need any news
	that would cause more selling on wall st. .....

    I have a question about the "ordinary income" that you calculate
    when you sell DEC ESPP shares that you have held for more than
    18 months (so it isn't added to your W2).

    I put this income on Federal Form 1040 line 21, "Other Income", and
    on MASS Sched X (line 5, I think).  Is this right?

    thanks,
    -dave

    I am trying to find information on "income averaging"... I bought a
    1996 book on filing taxes, but there is no reference to this... where
    can I find such info??
    
    Thanks,
    CJ
    

Re .11

Dave, I am planning to put the "ordinary income" part of the ESPP stock
sale on line 7 along with the rest of my Digital income, and including a
separate, selfmade schedule explaining why line 7 has more on it than can be
accounted for by my W-2.

This is my interpretation of the instructions, since the income is
"ordinary compensation income", and seemed to belong with the rest of
the ordinary compensation imcome mentioned on the W-2.

No matter which line you use, you will want to include an explanatory 
schedule so the IRS knows what the income is and where it came from.

-- Andrew

re .12

Income averaging was done away with a number of years
ago in one of the "tax simplifications"

We just went completed our taxes using Turbo Tax.  When we go through the
review, one error was highlighted - it finds the amount on line 1 of form
4137S/4137T to be zero and apparently, this cannot be zero or less than zero. 
These forms deal with SS tax /tips not reported to the employer.  Any idea where
this problem could have originated from?  Both of us have not had any such
income/tips!

We have been unable to figure this out.  The closest we came was that one of our
W-2 forms shows no entries in the SS wages and SS taxes boxes.  Could this have
been the reason for this error?  We did try just entering bogus figures in these
columns in the W-2 to see if we could pinpoint the problem, but it didn't help
us.

Thanks for any help!

  I own Templeton Developing Markets Trust Mutual Fund and received with my
  year-end statement the following statement:

  Intangible Property Tax
  -----------------------
  If you reside in a state that taxes intangible personal property, you
  may be able to reduce the reported value of your Templeton Dev Markets
  shares by 16.63%.  This percent represents the portion of the fund's
  portfolio invested in direct US govt obligations on Dec 29, 1995.

  Does anybody know if Massachusetts taxes intangible personal property? 
  
  I don't really understand what they are saying.


    Lisa

      

    I don't believe Massachusetts does.  I have never of heard of it in
    30 years of tax filings here.
    
    Florida is an example of a state which does. In their case, I believe its 
    a kind of substitute for State tax which they don't levy.  
    
    Jerry
    

>>  If you reside in a state that taxes intangible personal property, you
>>  may be able to reduce the reported value of your Templeton Dev Markets
>>  shares by 16.63%.  This percent represents the portion of the fund's
>>  portfolio invested in direct US govt obligations on Dec 29, 1995.

    I don't know about intangible personal property, but you can deduct
    that portion of the dividends that represents income earned from
    direct US govt obligations from the total (dividends) on your MA
    state income taxes.

    -dave

    
    
    I figured this note is as good as the others ...
    
    I sent in my Federal tax returns on 3/6/96 and have not gotten my
    refund check yet and remembered seeing a tollfree # in booklet about
    finding out the status of your return.  I want to make sure they did
    not lose it.
    
    DOes anybody have the phone # that they could post here  so I can find 
    out status of return ?
    
    Thanks in advance!
    ps. I threw out all my booklets once completed my taxes!
    

    Re: .19  I threw out all my booklets once completed my taxes!
    
    Agh. You'll be sorry in the future when you want to refer back
    to check something that looks strange, etc.  I keep -everything-
    related to my taxes each year back to the early Neolithic.
    
    That said, try the IRS 800 number from phone information.
    

> That said, try the IRS 800 number from phone information.

	Or try there home page on the Internet (who knowz, by now
	they might even allow you do check on the status of a refund
	online :-)

    FREQUENTLY CALLED PHONE NUMBERS - INTERNAL REVENUE SERVICE
    
    
    TELE-TAX IRS Information System 
    
        Call 1-800-829-4477  Tax Information & Refund status
                        402  Earned income Credit
                        155  Dependents
                        401  Child Care
                        112  Electronic Filing
                        224  401 K's
                        212  Lump Sum Dist.
                        310  Use of car for business
                        304  Moving Expense
                        152  Which form to use
                          9  Status of refund
    
    
    
    IRS Telephone Assistance 
    
        Call 1-800-829-1040  Tax information notice inquiries,
                             Problem Resolution Program,
                             Request for IRS speakers 
    
    
    FREE Helpful IRS Publications and Forms order:
        Call 1-800-829-3676  Publication Number#:
                             #  17 Your Federal Income Tax
                             # 596 Earned Income Credit
                             # 910 Guide to Free Tax Services

Still awaiting my wife's W2.
They are always late.
Typical of an insurance Co.
:-)

    I'm having a hard time figuring out the cost basis for a stock because
    I participated in the company's DRIP.  Specifically, I acquired 100
    shares of AT&T in '91 and I've been in the DRIP since then and made a
    few supplemental buys.  When Lucent was spun off, they distributed
    whole shares only, and the fractional share was sold.  AT&T has
    provided a worksheet to figure out the basis for AT&T and Lucent stock
    (NCR too), but I don't know how to figure out the initial basis.of my
    AT&T stock.
    
    Since the distribution was based on all the shares I owned, I think I
    should use the average method.  Is this the right approach?  I've read
    IRS pub. 550 and it seems to state that the average method can only be
    used for mutual fund shares.  It only covers DRIPS when the plan allows
    you to buy stock at a discount.
    
    Also, should the gain be reported as short or long term?  It doesn't
    matter to me since I'm in the 28% bracket, but I'd like to learn for
    when I get rich.  :-)
    
    Jamie

    Jamie -
    
    I also am in the same situation.  I was given AT&T stock as a kid and
    have been investing optional purchases and the DRIP since that time.
    I have maintained for the last couple years a spread sheet to calculate
    the total cost basis.  I basically have totaled up the optional
    purchases and dividends recieved, thereby producing what I believe is
    an average basis cost per share.
    
    I also noticed that the informational sheet from AT&T indicated that
    you were supposed to perform this cost basis/allocation method on each
    individual purchase.  I have used my average basis cost per share for
    the initial basis of my number of shares at the spin off time.
    
    /Howard
    

    re .35
    
    My reading of the IRS pubs. lead me to believe that averaging can only
    be used to figure out the basis for mutual fund shares.  I couldn't
    find anything on how to calculate the basis for this type of
    distribution.
    
    I've got a new question.  In reporting income from a mutual fund, the
    total distributions (dividends + capital gains) are entered on Schedule
    B as dividend income.  Then the capital gain portion is entered on
    Schedule D.  I understand that capital gains are taxed differently, but
    doesn't this mean that I'm paying tax twice on the same money?
    
    Jamie

    Re: .36 new question
    
    You don't pay tax twice on the same money.  I completely forget how
    this works, but the fine print in the instructions tells you how to
    enter stuff so that this works.  My Dad: "If all else fails, read the
    directions." :-)
    

    
    RE .35 Jamie,
    
    The amount added on Schedule D is also subtracted on line 7
    of schedule B.  So on schedule B you add in all dividends and
    cap gains, then subtract the total of all your cap gains on
    line 7.
    
    So...schedule B contains only dividends (and short-term gains...
    but who cares...) and schedule D contains the long-term gains.
    
    					Ed
    
    

    re .38
    
    That explains why I didn't pick up on it -- I don't file Schedule B
    (next year).  Can I file it even though I'm below the $400 lower limit? 
    Guess I've got some more work to do.
    
    Thanks for the advice.
    
    Jamie

>     Also, should the gain be reported as short or long term?  It doesn't
>     matter to me since I'm in the 28% bracket, but I'd like to learn for
>     when I get rich.  :-)

If you're paying MA taxes, it's not too soon to worry about getting a handle 
on this - MA taxes ST gains differently from LT gains.

    I'm using TurboTax to prepare this years taxes.  Last week my wife 
    received a refund check from her 401K.  The letter indicated the money
    should be included in line 7 of the 1040 and that the company would 
    issue a 1099R form next January showing this amount as 1996 income.
    No revised W2 will be issued this year.  The 1040 instructions for line
    7 indicate that is the place to put the income, but that it is usually
    reported on a 1099R.

    My question is this.  How do I get this income added to line 7 using 
    TurboTax without doing one of the following?:

		o  Creating fake 1099R form
		o  Overriding W2 income already totalled in line 7 number

    If I create a fake 1099R form in TurboTax to get the income added, what 
    will happen next year when I actually do get a 1099R?

    Thanks,
    Kevin