Ramzy M. and Lena Kopty - Page 14




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                   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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