Ed Zollars, CPA wrote:
- quote -

It may be low, but it need not be non-existent. :-)

- quote -

It could also be a combination of the two.

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Eric Hoefnagel wrote:

- quote -

What early withdrawl? It's an inherited account, and death
is an exception to the 10% excise tax. It's just a "normal"
withdrawl.

- quote -

IRC 6103(e)(1)(E)(ii) and (3)(B): As a beneficiary, she has
a material interest in knowing if there is a basis in the
IRA - and therefore a right to have that information
disclosed to her upon WRITTEN request.

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Eric Hoefnagel wrote:
- quote -

Eric, disregard my reply just posted. I had not remembered
you had said the executor had (already) died. So, we're all
stumped now.

Cheer$,
Harlan LUnsford, EA n LA

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Eric Hoefnagel wrote:

- quote -

Well, I would point out that you could quickly compute the
maximum that could have been there in basis--as I recall,
nondeductible IRAs entered the IRC for 1987 returns and if
he had made the maximum nondeductible contribution each year
it appears that the maximum basis would have been $24,000.
If that exists it helps a little, but it's going to leave a
lot of tax left over as well as still a substantial
underreporting penalty.

But, that said, if you want to pursue this I would consult
with a probate attorney in the state having jurisdiction
over the estate to establish just who would currently have
the right under state law to "speak for the decedent"--and
then hope that party is cooperative and will consent to a
request for copies of the returns <grin> . Note I suppose
that this might require actually getting a state court to
rule on the matter of who can act for the decedent--or it
least that would be helpful in convincing the IRS to release
the information.

--
Ed Zollars, CPA
Phoenix, Arizona

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"Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote:
- quote -

talking about the possibility that the deceased might have
filed forms 8606 in the years prior to his death and
therefore is or was entitled to a cost basis. What I am
trying to get the IRS to do is to look at copies of his
returns prior to his death, going back to the time that the
IRA account was established, and see if any of them had
Forms 8606 attached to the returns, and get those amounts.
So far they have declined to help my client do so and they
are stonewalling, hiding behind the confidentiality
argument.

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Eric Hoefnagel wrote:

- quote -

Why would he have a cost basis in the IRA? The only way he
*should* be able to get a cost basis in an IRA is if the
account contained nondeductible *IRA* contributions. The
very facts you mentioned work against you there--your theory
that he was too young would just as well argue that any
basis would be relatively low.

Had the amount come from an employer retirement plan
rollover, that would *NOT* have basis left in it--he could
not have rolled basis from a retirement plan into an IRA.

--
Ed Zollars, CPA
Phoenix, Arizona

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Client was engaged to be married in 1998, when her fiance
died suddenly. He was 42 years old. He had an IRA account
with a value of $482,000. She became the beneficiary of that
IRA account. Client withdrew a large portion of the IRA in
2000 when she became unemployed. The fiduciary did not do a
good job of explaining to her the tax consequences of the
early withdrawal. She moved several times and did not
receive the 1099-R issued by the fiduciary. She failed to
include the IRA withdrawal on her 2000 return and the IRS
picked it up and did a correspondence audit and stuck her
with an substantial amount of TPI and a substantial
underreporting penalty ($21,000.00). The stat notice was
returned to the IRS as undelivered.

The executor administering the estate has died. IRS will not
disclose return information on the fiance. There appears to
be a good chance that the fiance might have had a cost basis
in the IRA that my client would be entitled to use. He was
only 42 years old when he died and the $482,000.00 seems to
be quite a large amount for someone that age to have
accumulated in an IRA. I have requested an audit
reconsideration. But the burden of proof will be on my
client to show that she might have been entitled to claim a
cost basis.

Any ideas or suggestions?

Thank you,

Eric Hoefnagel EA
Dallas, Texas
Erictaxhelp[at]aol.com

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