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Author: gyung Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121144  
Subject: Capital Gains for a Child Date: 2/13/2002 10:50 AM
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I have a Schwab Custodial Account for my 1 year old and placed a trade in 2001 for her (bought 50 shares of a stock and then sold them). How do I report this??? I know of the Kiddie tax, but that only applies to interest and dividends - what about a REAL Capital Gain like I stated above?

P.S. I only had a net gain of $15 on that transaction.
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Author: hghcpa Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58900 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 10:57 AM
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I have a Schwab Custodial Account for my 1 year old and placed a trade in 2001 for her (bought 50 shares of a stock and then sold them). How do I report this??? I know of the Kiddie tax, but that only applies to interest and dividends - what about a REAL Capital Gain like I stated above?

P.S. I only had a net gain of $15 on that transaction.
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if this is the only income then you do not have to file - first 1500 of unearned income is tax free under age 14

pete

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Author: gyung Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58901 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 11:02 AM
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My Child has a $230 gain from interest/dividends and $15 net gain from a stock transaction.

My only concern is that Schwab sent the IRS a statement showing a $5000 sale of stock (I initially put in $4985, thus the $15 net gain) and they will not be able to track the sale on my return if I don't report it. (I know one of the red flags is having a stock sale not matched to my return) - will it bring up a red flag for them?

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Author: hghcpa Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58902 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 11:24 AM
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whose social security number is on the account?


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Author: gyung Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58903 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 11:44 AM
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Just my daughter's social sec. number is on there.

P.S. This is a Charles Schwab Custodial Account - I'm the custodian parent.

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58906 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 12:11 PM
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You'll need to file a return for your daughter. The gross proceeds from the sale are large enough to trigger a filing requirement.

You cannot simply include the transaction on your return. That option is available only for interest and dividends.

She shouldn't have any tax to pay, but the return will need to be filed to prove that.

--Peter

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Author: gyung Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58907 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 12:18 PM
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Do I need to file both a separate 1040 AND State return for just my daughter or are there other forms I can use?

Also, she'll be a dependent on my filing, but then an "individual" on her own filing?

Thx

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Author: hghcpa Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58908 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 12:21 PM
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Just my daughter's social sec. number is on there.

P.S. This is a Charles Schwab Custodial Account - I'm the custodian parent
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file a separate tax return for her showing the gross sales proceeds and the net profit on scheudle d. No tax will be due on the return but should the computer try to match up against the 1099 it will be able to find it

election to include kiddie income on parents tax return only applies to interest dividend and capital gain distributions, so she would be required to file seperate in any event with the capital gain on the stock sale.

pete

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Author: hghcpa Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 58909 of 121144
Subject: Re: Capital Gains for a Child Date: 2/13/2002 12:23 PM
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Do I need to file both a separate 1040 AND State return for just my daughter or are there other forms I can use?

Also, she'll be a dependent on my filing, but then an "individual" on her own filing?

Thx
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dont know what your state filing requirements are but i would guess yes.

she is a dependent on your return but is single on her own return yet cannot take a dependency exemption for herself since you are taking it.

pete

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