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1099-R - issued to one, but distributed to 3 children - how to handle

Hi,

I'm hoping someone can help me. My dad passed away in 2004. Last year I was contacted by Aetna saying he had a annuity - he paid approx. 2500.00 for it back in the 60's and it was now worth 10K. So I went to the probate court. They issued an order (since there was no estate- my father died with less than 10K in his name) for them to issue it to me and I should disburse it to my brother and sister - which I did - I have the cancelled checks. The problem is they issued the 1099R in my SS# for approx. 7K in taxable income. Can I issue my brother and sister a 1099R? Ordinarily I would have them just pay me and call it square except we are all in very different tax brackets which would make it more expensive for them.

Any help would be greatly appreciated.

Reply to
Leslie Kosturko
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You should not issue a 1099-R to your siblings. Here's what I would do. Report the entire 1099-R on line 16 of your return.

On line 21, write "see statement" and enter the taxable portion you paid to your siblings as a negative amount. Attach a statement to your return as follows:

Attachment to line 21, Other Income

Pension/annuity received as nominee for [sibling 1 name, sibling 1 SSN]: Gross Distribution: $[portion of 1099-R box 1] Taxable Amount: $[portion of 1099-R box 2a]

Pension/annuity received as nominee for [sibling 2 name, sibling 2 SSN]: etc.

If there are amounts in any other box you may need to attach a similar statement for other lines on the return (for example, box 4, federal income tax withheld, or any of the state boxes).

Provide the same information to your siblings so they can include the appropriate amounts on their returns.

Ira Smilovitz, EA

Reply to
ira smilovitz

What's wrong with issuing a "Nominee" 1099-R. It's unusual circumstances, but the other beneficiaries would have to report the income on line 16, and matching might screw things up.

Of course, doing it that way (netting on line 16, with an attachment) would screw up the OP's return

Reply to
Arthur Rubin

An individual can't issue a 1099-R. The proper way is to report the full amount on the pension/annuity line and enter a negative value on Line 21 and describe it as nominee distribution with ssn of person receiving it. Then a nominee 1099-misc can be created and mailed to the other people and the IRS.

Reply to
Alan

Actually, Arthur is right. You do issue a nominee 1099-R (See the General Instructions for Certain Information Returns). I would still back out the taxable amounts distributed to the other beneficiaries on line 21.

Ira Smilovitz, EA

Reply to
ira smilovitz

What about a 1099-Misc as a nominee 1099?

Reply to
Stuart O. Bronstein

Yep, it certainly does say that as it uses the generic term 1099. That said, I wouldn't do that (i.e., use a nominee 1099-R). I would use the

1099-MISC as that supports the negative entry on Line 21.
Reply to
Alan

The instructions say to use the same type of 1099 as the one you received. There is nothing special about using a 1099-MISC for line 21. While a 1099-R may be "strictly" correct, I doubt the IRS would raise an issue if a 1099-MISC were used.

Ira Smilovitz, EA

Reply to
ira smilovitz

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