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R. Greg Paszkiewicz
R. Greg Paszkiewicz, Enrolled Agent
Category: Tax
Satisfied Customers: 357
Experience:  9 years preparing tax returns - Marietta, GA
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reinvestment of mutual funds

Customer Question

I have taken out 83,000.00 of a mutual acoount to invest in a business. How much of this is taxable?
Submitted: 11 years ago.
Category: Tax
Expert:  R. Greg Paszkiewicz replied 11 years ago.
If this is an after-tax account the only tax you may owe is capital gains on the appreciation of the mutual funds since you purchased them plus the usual tax on any dividends and interest earned by the funds. The fund company should send you an end of the year statement showing capital gains or losses from any sales. If these funds were in an IRA or some other retirement account that is a whole other story.
R. Greg Paszkiewicz, Enrolled Agent
Category: Tax
Satisfied Customers: 357
Experience: 9 years preparing tax returns - Marietta, GA
R. Greg Paszkiewicz and other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to R. Greg Paszkiewicz's Post: It is taxable! The form is 1099-R. Help! what does this mean? This is the first time I have filed since a divorce. How much can I write off since I invested in a business and haven't made anything yet? Thank you!
Expert:  R. Greg Paszkiewicz replied 11 years ago.
There is no link between the sale of the mutual funds and the investment in the business it doesn't matter what you did with the money. It sounds like you pulled money out of a retirment account which can mean regular income tax plus possible early withdrawal penalties. What is the code in Box 7 of the 1099R? Is the business you invested in incorporated? If so, is it an LLC, a sub-S, or a C corporation?

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