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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2317
Experience:  IRS licensed Enrolled Agent and tax instructor
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When my father passed, the State Medicaid services asked

Customer Question

When my father passed, the State Medicaid services asked that I pay for Mom's care before she passed in a nursing home. My father had left $9500 in stock to me, which they asked be cashed out and sent to them, which was. I received an 1099-Div showing an $85.70 gain to me. Can this be claimed as a loss on my tax return?
Submitted: 9 months ago.
Category: Tax
Expert:  emc011075 replied 9 months ago.

Hi. My name is ***** ***** I will be happy to help you.

First, to who the dividend statement had been issued to? Whose social security number is ***** the 1099Div?

You cannot claim capital loss by claiming medical expenses. That's just not the way it works. The sale of stock and paying off nursing home are two separate events and has to be treated as such. If you claim your mother as your dependent and itemize your deductions you can claim the nursing home as medical deduction. Depending on your income, you may not even have to pay tax on the dividends and sale of stock.

But there seems to be another issue. Sale of stock is NOT reported on 1099Div. 1099Div is used to report dividends. Sale of stock is reported on 1099B. Can you please clarify what what type of statement you actually received? 1099Div is not reported in the same way as 1099B.

Customer: replied 9 months ago.
It is a 1099-Div with my social. I still own the stock. I chose to write them a check instead.
Expert:  emc011075 replied 9 months ago.

Ok. So you haven't sold the stock. The dividends are reported on schedule B and if any of it are taxable depends on your tax bracket. If you are in 10 - 15% tax brackets, your dividends are not taxable. In higher tax brackets your dividends will be taxed at 15%. Which means, net tax on $86 dividends will be $13.

Expert:  emc011075 replied 9 months ago.

If your mom is in nursing home and you pay more than 50% of her support you can claim her as your dependent (even if she doesn't live with you) and deduct the medical expenses on your return. In order to do so you will have to itemize your deduction.

Customer: replied 9 months ago.
My Mother passed before my father. The State wanted to be repaid when my Dad passed. Thus, they instructed Ameriprise to sell the stock. When I found out, I told them I wanted to keep the stock and would write them a check. Ameriprise bought back the stock, which I still own. I wrote the state of SD a check for it.
Expert:  emc011075 replied 9 months ago.

Oh, I am sorry. I thought you had to pay for the nursing home for your mother to stay there. Usually you are not required to pay off your parents debt, especially if the asset is already in your name.

In that case no, you cannot claim the loss. This would be considered a personal expense and therefore not deductible.

Expert:  emc011075 replied 9 months ago.

I know nursing homes do whatever they can to collect from relatives what they cannot get from the residents. But at the end you are not responsible for your debts accumulated by your parents and therefore the payment was voluntary and personal. The only way to deduct it would be if you could somehow claim your mother as your dependent in the year you made the payment, for instance if she passed away in mid year and you paid it off by the end of that year.

Customer: replied 9 months ago.
The State was going to lien other property if they did not get the money.
My Mother died in 2010 and this happened in 2015.
Expert:  emc011075 replied 9 months ago.

That's probably as far as the state would go. Lien is not a levy. Lien doesn't mean that the state would take the property and sell it. It only means that when you sell the property, the state would be paid off first before the proceeds were distributed to the beneficiaries. If you paid it off and you are one of the beneficiaries, you can request to be reimbursed before the rest is distributed to the beneficiaries.

Expert:  emc011075 replied 9 months ago.

But unfortunately there's no deduction for that at this time.

Expert:  emc011075 replied 9 months ago.

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