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margin account and association with Form 1099-DIV

Have a has a margin account with Investit Investment Company. The stocks and bonds in the account earned dividends and interest of $10,000 in 20X9. The $10,000 was paid directly to the margin account and used for reinvestment purposes only. received a substitute Form 1099-DIV which indicated the composition of the $10,000. However, Smythe did not report the $10,000 as income in 20X9. He reported it as income in the next year when he closed the margin account. The IRS has indicated that Smythe must include the $10,000 in 20X9, and in addition to taxes has assessed interest and penalties. Smythe seeks your advice. can you assist

Reply to
iramigut
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Smythe screwed up. The dividends and interest received in 2009 are taxable in 2009 whether or not they were reinvested in the account, in securities, or were withdrawn.

Why did Smythe think they were not taxable, anyway?

Smythe will have to pay the additional tax and interest. I'd expect he'd almost certainly have to pay the penalty as well since this is elementary, black-letter stuff that those dividends were taxable in 2009.

Reply to
Rich Carreiro

I concur. I see no reason for anyone to assist Smythe in paying what he owes.

Reply to
Pico Rico

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