Skip to main content

Estate received a 1099B for a stock sale which was deemed illegal. Transaction was reversed within days. What now.

Somerville, NJ |

Hard to believe this happened. A Broker transferred stock from my deceased Step Father to my deceased Mother(I am the Executor), then one week later, realized it was an' illegal' transfer that should never have been done, so reversed the entire transaction as if it never happened. The Estate just received a 1099B for selling the stock. How do I correct this. If the Estate could not own this stock legally, how could the Estate have sold it? The Broker claims that my Mother was not the beneficiary of the stock, even though they were the ones who decided to transfer it to her initially. It was their error, and I believe they are not willing to admit it because of concerns about SEC laws. Will this affect the Estates taxes. Value is about $30,000. Total Estate value only about $60,000.

Attorney Answers 1


  1. A 1099 unquestionably will affect state and federal taxes and probably will lead to inquires from IRS and NJ Division of Taxation if not reflected on tax returns or corrected. When a 1099 issues but isn't reflected on income tax returns, tax authority computers normally pick up the discrepancy by matching. In turn, this can lead to demands for tax, interest, and penalties. Therefore, it's important to get the 1099 corrected if it is truly incorrect or to reflect the 1099 in estate and (depending on timing and other circumstances) possibly beneficiary tax filings. I just had a similar situation myself where I noticed a financial institution had handled a transaction incorrectly. With my tax background [Master of Laws in Taxation from NYU School of Law], I was able to work with the institution to correct the error. While you don't necessarily need a lawyer, I think you'll have a tough time dealing with this if you don't get legal advice. I'd be happy to work with you and I'm only minutes from Somerville in Bridgewater, but it would involve legal fees of at least several hundred dollars.

    Lawrence Friedman, Bridgewater, NJ. Certified as an Elder Law Attorney by the ABA approved National Elder Law Foundation, former Chair NJ State Bar Association Elder and Disabilities Law Section, Member Board of Consultors of NJSBA Real Property, Trusts & Estates Law Section, Vice Chair Special Needs Law Section of National Academy of Elder Law Attorneys, and Master of Laws (LL.M.) in Taxation from N.Y.U. School of Law. Visit SpecialNeedsNJ.com for articles and Q&A on elder law, special needs, wills, trusts, estates, and tax. Visit SpecialNeedsNJ.com/blog and subscribe for free timely updates to be delivered to your inbox. Information on both Avvo and SpecialNeedsNJ.com does not constitute legal advice, as it is general in nature and may not apply to your situation or be subject to important changes. No attorney client relationship exists unless set forth in written engagement terms.

    Lawrence Friedman, Bridgewater, NJ. Certified as an Elder Law Attorney by the ABA approved National Elder Law Foundation, former Chair NJ State Bar Association Elder and Disabilities Law Section, Member Board of Consultors of NJSBA Real Property, Trusts & Estates Law Section, Vice Chair Special Needs Law Section of National Academy of Elder Law Attorneys, and Master of Laws (LL.M.) in Taxation from N.Y.U. School of Law. Visit SpecialNeedsNJ.com for articles and Q&A on elder law, special needs, wills, trusts, estates, and tax. Visit SpecialNeedsNJ.com/blog and subscribe for free timely updates to be delivered to your inbox. Information on both Avvo and SpecialNeedsNJ.com does not constitute legal advice, as it is general in nature and may not apply to your situation or be subject to important changes. No attorney client relationship exists unless set forth in written engagement terms.

Wills and estates topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics