ALLEGES THAT THE REPRESENTATIVE MADE INAPPROPRIATE RECOMMENDATIONS WHICH LED TO INCREASED TAX LIABILITY AND LOSS OF INVESTMENT INCOME.

$125,000.00

THE CLIENT EXPERIENCED A HIGHER THAN USUAL TAX LIABILITY IN 2007 DUE TO HER NEGLECT AS TRUSTEE FOR THE BENEFICIARY OF HER DECEASED HUSBAND'S IRA TO MAKE REQUIRED MINIMUM DISTRIBUTIONS (RMDS) OVER A PERIOD OF THIRTEEN (13) YEARS. AT HER CPA'S ADVICE AND WITH THE CPAS CALCULATIONS OF TAXES DUE, SHE MADE RETROACTIVE DISTRIBUTIONS IN 2007. THE INTERNAL REVENUE SERVICE IMPOSES A 50% PENALTY ON LATE DISTRIBUTIONS; THEREFORE THE CLIENT HAD TO PAY A 50% TAX PENALTY IN ADDITION TO THE INCOME TAX GENERATED BY THE DISTRIBUTIONS. IN ADDITION A SMALLER PORTION OF HER TAX LIABILITY WAS DUE TO THE FUNDING OF THE IRREVOCABLE FAMILY TRUST OF WHICH SHE WAS TRUSTEE AND HAD FAILED TO FUND FOR A PERIOD OF THIRTEEN (13) YEARS. THE CLIENT RECEIVED A HIGHER INCOME FROM HER INVESTMENTS AS A RESULT OF THE RESTRUCTURING OF HER PORTFOLIO. HER PRIOR PORTFOLIO INCOME WAS FEDERAL TAX FREE INCOME, WHILE THE NEW PORTFOLIO PROVIDED BOTH FEDERAL AS WELL AS STATE TAX FREE INCOME; IN ADDITION THE RESTRUCTURED PORTFOLIO PROVIDED THE CLIENT WITH A HIGHER RATE OF INCOME.