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Author: TheTortoise One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121114  
Subject: Broker Error on 1099-B? Date: 4/16/2011 9:50 PM
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In the past I’ve owned the SPDR Gold Trust (GLD) in my taxable account. After several years of dealing with the then new “Cost Basis Allocation Factor,” I sold all of my GLD and vowed never to own collectibles in a taxable account again. I sold the last of it on 12/30/2009, and looked forward to a peaceful tax season for 2010.

I’ve just discovered that my broker listed GLD on my 2010 1099-B, specifically the 12 monthly amounts for the “Cost Basis Allocation Factor” totaling $21.43 ... which is then included in the total 1099-B gross proceeds. Since I haven’t owned GLD since 2009, this seems like an error ... or am I missing something?

I’ve emailed the broker but don’t expect a response before Monday’s deadline.

I’m wondering whether the $21.43 discrepancy between my return and the 1099-B is enough to cause any problems ... and whether I should file an extension and try to get the broker to correct the 1099-B before I file?

Thanks for any thoughts.
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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113173 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/16/2011 10:14 PM
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I would either file the return as you think it should be or file for an extension, whichever makes you feel more comfortable. It doesn't really matter. If the 1099-B is in error, you can get it corrected before the IRS computers begin document matching. If the 1099-B is correct, you can always amend your return. In all likelihood, if it's done quickly, you'll only owe any additional tax due (if any). The interest will be negligible.

Ira

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113174 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/16/2011 10:19 PM
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Sales are full shares. The sale was the end of 2009. Was there a partial share that was liquidated in 2010?

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Author: TheTortoise One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113177 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/17/2011 7:54 AM
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Sales are full shares. The sale was the end of 2009. Was there a partial share that was liquidated in 2010?

No partial shares ... everything was sold on 12/30/2009. Of course the sale didn't settle until early 2010, but ordinarily that wouldn't make a difference.

I just can't imagine that I'd be required to pay taxes on the fund's internal distributions made in each month of 2010.

The amount is so small that it would be simpler just to include it and pay the taxes ... but I'd rather get it right ... so no one starts to wonder whether I know what I'm doing.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113178 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/17/2011 11:11 AM
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and vowed never to own collectibles in a taxable account again.

IRAs are not allowed to own collectibles.

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113179 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/17/2011 11:32 AM
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IRAs are not allowed to own collectibles.

True, but remember this is tax law. From page 47 of Pub 590:

Exception. Your IRA can invest in one, one-half,
one-quarter, or one-tenth ounce U.S. gold coins, or
one-ounce silver coins minted by the Treasury Depart-
ment. It can also invest in certain platinum coins and
certain gold, silver, palladium, and platinum bullion.


I think I know the source of the confusion, but I'm not sure whether it's you or I who's confused. I think that gains from an investment such as OP's in a taxable account are taxed at the collectible rate, but such investments in an IRA are not considered a prohibited investment in collectibles. I think.

Pros?

Phil
Rule Your Retirement Home Fool

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113180 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/17/2011 12:06 PM
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Phil is right. The general rule is that IRAs cannot hold collectibles, but most rules have exceptions. In this case, investments in bullion and certain US collectible coins are allowed. (Somehow I thought that other gold coins such as those from Canada and South Africa were also permitted, but I may be thinking of something else and don't have the time to research it today.) IRAs cannot hold works of art, antiques, or other items which would be considered collectibles under US tax law.

Ira

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113181 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/17/2011 1:32 PM
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True, but remember this is tax law. From page 47 of Pub 590:

Tax laws are never easy. Maybe the OP was refering to being taxed at a collectible rate.

The GLD SPDR doesn't appear to be considered a collectible.

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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113182 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/17/2011 1:35 PM
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True, but remember this is tax law. From page 47 of Pub 590:

Tax laws are never easy. Maybe the OP was refering to being taxed at a collectible rate.

The GLD SPDR doesn't appear to be considered a collectible.


It is a collectible. It's just allowed to be held in an IRA. Any gains from holding GLD in a taxable account are taxed at the collectibles rates.

Ira

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Author: TheTortoise One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113212 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/19/2011 9:02 AM
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I’ve just discovered that my broker listed GLD on my 2010 1099-B, specifically the 12 monthly amounts for the “Cost Basis Allocation Factor” totaling $21.43 ... which is then included in the total 1099-B gross proceeds. Since I haven’t owned GLD since 2009, this seems like an error ... or am I missing something?

I’ve emailed the broker ...



The first response I received to my email was utter nonsense, stating that I had made four GLD transactions in 2010.

I emailed back a strongly worded response pointing out that I had printed a report from their website showing that -- in the entire history of my account with them -- I had made only one GLD transaction ... which was when I sold the entire position on 12/30/2009.

I requested my case be turned over to a high level supervisor. The next day I received an email telling me they had corrected their error and I should be receiving an amended 1099 within three weeks.

We'll see ... I'm glad I got it in writing.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113214 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/19/2011 1:45 PM
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I emailed back a strongly worded response pointing out that I had printed a report from their website showing that -- in the entire history of my account with them -- I had made only one GLD transaction ... which was when I sold the entire position on 12/30/2009.


Fortunately, it is a small amount. Did you file an extension or file based on them stating they would correct their error?

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Author: TheTortoise One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113228 of 121114
Subject: Re: Broker Error on 1099-B? Date: 4/20/2011 12:01 AM
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Fortunately, it is a small amount. Did you file an extension or file based on them stating they would correct their error?


Yes, it is fortunate it is a small amount ... sometimes my carefully suppressed fear comes to the surface when I experience the incompetence of a financial institution to whom I've entrusted my meager life savings. It's not the fact that they make mistakes ... everyone makes mistakes ... but it's the inane responses I get when I point out the mistakes that terrorize me.

I went ahead and filed on time. I'm sure I won't ultimately owe any penalty or interest ... it's just the time I might have to expend that annoys me.

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