@sbpilates wrote:
only in the last 2 years did he. His Parents passed away and he inherited some funds.. He invested that in the Stock market. Made a Big gain in 2021, then pretty much lost it all in 2022. He has a very small amount of funds left. No Property, only a Truck and some funds left in the brokerage account.. I assume he owes taxes for the 2021 year where he made a gain. But without any other info its pretty hard to file. And if i simply reach out to the IRS they will try to bait me into something that I have no clue about . Its really amazing that the CPAs i have been talking to seem to have no clue in this case.. Its also amazing to me that the IRS never ever audited him.
Gains are only taxable if he cashed them out (sold the stocks with the gain). Then the broker would generate a 1099-B form, and that would be in. the wage and income transcript. If the stocks increased in value and he let them ride, and then they lost in value, there won't be a taxable gain. Gains are only taxed when they are realized, speculative gains are not taxed.
If you have broker statements you can contact the broker directly and ask for copies of the 2021 and 2022 combined statement. Depending on what he was invested in, he might get a 1099-INT, a 1099-DIV, a 1099-MISC, and/or a 1099-B. Most brokers issue one document called a "combined statement" that includes all those details.
And again, even if he realized his gain, it's only taxable if his total income passes one of the two tests I described above. And remember, if he inherited stock, his gain is calculated based on the value on the day the previous owner died, not on the price the previous owner paid. So the taxable gain might not be that much, even if he made a lot of cash.
And on top of that, his long term capital gains are tax-free unless his total taxable income (including the gains and half his SS) are more than $54,000.
So there might be legitimate reasons he did not file a tax return or owe tax.
You need to think of yourself in the investigative/document gathering stage. Don't worry about preparing a return for a while.
