Tax Experts?

[Crocodome]

OK - looking for a quick answer here if anyone has the knowledge. My mom just moved her mutual fund over to a different broker - the IRS evidently didn't catch that she just moved it - didn't cash it in. They are trying to ding her for capital gains tax... she hadn't received any finds... extension filed. But does anyone know the magic forms that will help the IRS see the light? Strategy suggestion?

Such a BS situation... my mom was recently widowed, so on top of missing my dad horribly, I'm watching the govt mess with her even more for no reason other than her crappy mutual fund holder forgetting to check a damn box.

 

[Crocodome]

bump

 

[needtogetarmy]

It depends which type of find she has.

Not all mutual funds can be transferred. For example, a proprietary money market fund cannot be transferred to a new broker (and this is a mutual fund). A proprietary fund is one that is issued by the company your mom bought it from. The bottom line is she will need to sell the shares she has in it, which will then convert to cash, and the new fund will invest the cash for her into the new fund. To the best of my knowledge, she will need to pay capital gains on it in this situation.

On the other hand, if the mutual fund is a retirement fund or employee pension plan etc., she should be able to transfer it without any tax implications.

What your mom needs to do is this:

1) Call the new brokerage firm and ask them what is up. If it is a non-taxable transaction they will give her the forms she needs to fill out.

2) If she discovers the transaction is taxable she needs to contact the old brokerage and ask them why they did not tell her the transaction is taxable. They may have a way to unwind the transaction so she avoids the tax penalty.

3) If she cannot unwind the transaction and must pay the tax, and the original brokerage did not notify her of the tax implications, they may have breached their fiduciary duty to her and I would recommend obtaining an attorney and sue the old brokerage.

 

[Crocodome]

Thank you so much!

 

[needtogetarmy]

Thank you so much!