Watch For Capital Gains Tax
January 9th, 2008My father retired a few years ago and established some large investments. In fact he did so goodl that he transferred a few of his holdings into his children’s name. This was then paid out into checks for them all. The income was subject to capital gains tax since the payment was directly paid from the company . All of us got a statement for tax purposes. My brother mislaid his statement and told his tax preparer that it was gifted money from his father. Because the amount was not big enough the tax preparer told him that this didn’t have to be claimed . Months later he was sent a letter from the IRS because he didn’t report the capitol gains tax. He then contacted his tax accountant. The tax accountant told him that he never realize the money came from an investment and that he had to pay capital gains tax on the amount of money. Since he didn’t have the form sent by the investment company his business firm wouldn’t cover any penalty. My brother was upset by the whole thing. He felt it was the accountant’s fault that he had to pay a penalty as he had told him about the money and the accountant told him have didn’t have to claim it.
