-14-
were not “free and clear” on that date of
preparation which was solely under JDEdwards
control.
5. We are considering to hand this matter over to a
legal adviser to resolve this matter since it has
material repercussions on lost amounts and taxable
income.
In order to avoid penalties and interests, we have
forwarded to you earlier a check amount of US
$13,529.00 to be considered as a pre-payment for the
time being. Also we would like to request from you any
suggestions that will help us resolve this matter.
[Emphasis added.]
In substance, the above letter states that the filing of
petitioners’ 1998 return was delayed due to an error made by Mr.
Kopty’s ex-employer, J.D. Edwards & Co., in preparing his Form
1099-R for 1998. Petitioner complains that the gross
distribution shown on the Form 1099-R in the amount of
$467,817.48, valued as of July 15, 1998, greatly exceeds the
proceeds realized from the sale of the shares on November 16,
1998, in the amount of $339,230. Petitioner complains that the
value of the distribution reported to the Internal Revenue
Service on the Form 1099-R was based upon the higher price per
share on July 15, 1998, when “the shares were not ‘free and
clear’”. In effect, petitioner’s letter suggests that the Form
1099-R overstates the value of the stock issued to petitioner
and, thus, overstates the amount includable in petitioners’
income. The letter refers to the fact that petitioner had made a
“pre-payment” of tax of $13,529, and it requests “any suggestions
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