Anyone having trouble with QCD deduction for 2011?

[Deleted]

Got one of those fun letters today from my friends at IRS.  They want more $$ because they are not recognizing our 2011 QCD which was a direct trustee transfer from DH's IRA to qualified charities, offsetting his RMD.  Of course, the imputed increase in income also caused a reduction in income limited deductions like medical and misc. 

I have a call scheduled to my CPA tomorrow a.m.

If we're having this much fun with a 2011 direct trustee transfer, can you imagine how much fun the 2012 "I took it in December 2012 but gave it to the charity by personal check in 2013" Congressionally approved donation will be? 

Has anyone else had this problem on 2011 taxes?

[The Captain]

No, but it sounds like kinda nice problem to have.  Kudos to you for your generosity.

[mwcpa]

I have not seen this issue yet, but as long as your ducks are in order it should not be too hard to correct the error.  It seems like their may have been a "coding" error on the 1099 form the bank/broker issued for the qualified distribution.  For a notice to come this quick for 2011 it may be a computer matching matter.  (IRS computers match 1099s, w-2s, k-1, etc. to individual taxpayer's filings and automatically generates a letter when things do not match up)

.... I often see this for the missing capital gain transaction.... normally I get the I held this stock at XYZ broker and it was a dog so I sold it at a loss, why do I owe tax on that.... the IRS only sees the sale side on many trades.... when I ask why they did not give me the reporting form, I forogt is the common answer.....

[Deleted]

I agree on the coding issue because the IRS letter references "Distribution Code 7".  My CPA will send a letter to the IRS with the brokerage distribution letters and checks to the charities along with their letters of receipt which should clear things up.

I wonder how the IRS will do with the 2012 RMD which, as you know, many of us received directly in late December 2012 but were allowed to gift in early January 2013 as a 2012 QCD because of our beloved Congress' procrastinating ways.  I have my cancelled checks and the recipients' receipts which is as good as it's going to get for documentation.  Congress definitely dumped a mess in the IRS' lap on that issue.

This is a perfect example of why you need to keep your tax related documents well organized.  Sloppy recordkeeping could be expensive on something like this.

[TheOtherMe]

May 3, 2013 8:59:00 GMT -5 @donethat said:

This is a perfect example of why you need to keep your tax related documents well organized.  Sloppy recordkeeping could be expensive on something like this.

As a retired IRS agent, I can tell you that sloppy record keeping has cost many a taxpayer.  Good record keeping is a must for any tax return.