Tax Law (Questions About Taxes)/IRA Transfer

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QUESTION: During 2015 I switched my entire regular (non-Roth) IRA from one
broker to another via a custodian to custodian transfer. I received a 1099 from my previous broker (Fidelity) which showed the entire amount transferred in Box 1 (Gross Distribution). I know this was a non-taxable transaction since I never directly received any of the funds. My question is: Do I show the amount appearing on the 1099 on my 2015 1040 tax return and then indicate it is non-taxable, or do I omit the entire amount from the 1040? Thank you.

ANSWER: Alan,

Thanks for your question.

Box 7 should show a distribution code of "G" which indicates it is a rollover. Show the amount of the rollover and show zero taxable. If it is not code G, you should contact Fidelity.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Hi John,
Thanks for prompt reply to my inquiry. I think I'm in a Catch-22 situation after speaking with Fidelity about Box 7. Let me explain. I received a 1099-R from Fidelity which contained the following information: Box 1 (Gross Distribution)- The entire amount of the transfer (which closed the account); Box 2 (Taxable amount)- the entire amount of the transfer; Box 2b (Taxable amount not determined) "X" appears in that box; Also box 2b - "X" appears as total distribution, which it was; Box 7 ( Distribution code) - the number 1 appears; also in box 7, there was an "X" for IRA/SEP/SIMPLE.

I called Fidelity and told them they made a mistake sine this was a trustee-to-trustee transfer and is not taxable. I asked for a revised 1099-R, which they refused. They told me all I needed to do was call the new trustee who received the funds and ask them to send me a completed Form 5498, which would prove to the IRS that it was a non-taxable transaction. I called them and was told that the broker who transferred the funds(Fidelity)is responsible for preparing the 5498, and not the broker who received the funds. Who is responsible and what do you suggest I do now? Thanks and I look forward to your response.
Alan

Answer
Alan,

Don't you just love it that brokerage houses are never responsible.

There should be a place on your software below the actual form itself (at least that's where it is for me) that says something to the effect "Rollover Information." There should be a check or drop-down box to indicate it is rolled over into another plan or into the same type of account. That should solve it for you.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

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DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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