I have a complex problem for next year and thought I would start figuring out the solution now.

Facts:
1) My wife and her mother had a mutual fund set up as a JTWOS account over 10 years ago. The money for the initial investment came from my wife's grandmother.

2) My wife's mother is the first name on the account although our address is the address of record on the account.

3) My wife cashed in the entire fund recently with a sizable capital gain.

Questions:
1) Who is responsible according to the IRS for the capital gains tax? Based on my review of the government publications and discussion on the boards I think that the 1099 will be sent to my wife's mother at my address (confusing I know) because the IRS only seeks one payee and she is listed on the account first.

2) What is the term "backing it out"? I have seen that mentioned a couple of times and it seems as though it might be a way that my wife can get socked with taxes.

3) Does the address of record have anything to do with the responsibility for capital gains or just the order of names on the account?

Thanks for any help!
mwad