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lwillbur
New Member

How do I report money from unclaimed property fund?

State of California
4 Replies
NancyG
New Member

How do I report money from unclaimed property fund?

Whether the income is taxable or not depends upon what it represents.

You need not claim it unless you have some reason to believe that it represents taxable income.  If is merely a return of property you previously had and forgot about, that is not a taxable event.  For example, if it was an old bank account that you forgot about, the portion that is interest is taxable but not the portion that represents what you put into the account

How to Find Your Unclaimed Property & Cash 

FU09
New Member

How do I report money from unclaimed property fund?

Recently received an unclaimed property check from state of California for stock proceeds that were being held at a brokerage firm. I have no dates associated with these proceeds, state only sent a chk. Is this reportable?  Is this considered a long term capital gain?  Will I get a tax doc,?  I have no idea where to go from here....

Opus 17
Level 15

How do I report money from unclaimed property fund?


@FU09 wrote:

Recently received an unclaimed property check from state of California for stock proceeds that were being held at a brokerage firm. I have no dates associated with these proceeds, state only sent a chk. Is this reportable?  Is this considered a long term capital gain?  Will I get a tax doc,?  I have no idea where to go from here....


Only the state can tell you if they will send a tax document.

 

The tax laws take the position that all income is taxable unless you can prove otherwise.

 

If this is proceeds from the sale of stock, can you at least guess at which stocks they were?  Can you contact the brokerage for that information?  Presumably they knew your name, but were unable to locate you to send a check; maybe you changed addresses and bank accounts.  They should still have records.

 

If you can figure out what happened, then you would report the purchase price and date from the broker records, the selling price from the broker records, and the date of sale as the date you got the unclaimed funds.  It will either be a long term or short term gain depending on how long you had held the stocks before the sale.   It might even be a deductible loss, depending on what was sold and when.  

 

If you can't get the info from the broker, you will have to make a calculated guess on your taxes.  You could report the entire proceeds as regular income and pay regular tax rates.  Or, you could report it as a long term capital gain and pay the lower rate, based on the info that this money came from a broker.  But if you are audited, you would have to prove this was a capital gain and not regular income, which means contacting the broker, so you need to do that anyway.  Lastly, if the state does not issue a tax document, you can take the chance of not reporting anything.  But if you get caught, you will be assessed tax, penalties and interest.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Mike9241
Level 15

How do I report money from unclaimed property fund?

we have the same problem you do. when you sold the stock you may have reported the proceeds (including what you got from CA) for tax purposes in that year. in this case, since you already reported them the proceeds would be non-taxable.  they would have been held in the brokerage account until inactivity required the proceeds to be turned over to the state. that would make them non-taxable.  on the other hand, the proceeds may be the result of a lawsuit or maybe a contingent payment. under Ca law inactivity in an account for three years would make them subject to the unclaimed property laws. so those proceeds were received by the brokerage at least 3 years ago. 

if you know the brokerage firm contact them. it's up to you to determine taxability. 

 

how much effort you put into finding out more is sort of dependent on the amount involved. 

 

 

 

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