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Author: no2cat Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121338  
Subject: Joint Stock Owners Date: 5/12/1999 1:04 PM
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If a stock is held in 2 names as joint owners with right of survivorship (the owners are not related), do both owners have to pay taxes on the gains or can one owner pay all taxes and/or claim all losses. I assume the company sends the IRS a form showing both owners' SSN? Short of transferring the registration of the stock so that there is only 1 owner, how do I pay all taxes and keep the other owner from getting in trouble with the Feds?

Thanks for any referral to IRS pubs or other printed materials.
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15951 of 121338
Subject: Re: Joint Stock Owners Date: 6/2/1999 8:49 PM
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[[If a stock is held in 2 names as joint owners with right of survivorship (the
owners are not related), do both owners have to pay taxes on the gains or can
one owner pay all taxes and/or claim all losses.]]

That depends upon a number of issues. Generally, hold stock as a joint tenant when the people involved are not married cause a BUNCH of problems.

If you both contributed to the purchase, then you are both requried to report your interest, dividends, and gains on the appropriate pro-rata basis. If only one person purchased the shares, then generally that person may be required to report the entire income/gains on the transaction...UNLESS it is determined that a GIFT has been made to the other person. Again...it's a real mess and is not the best way to hold title to an account for two separate, unrelated people...at least in my opinion.

[[ I assume the company sends the
IRS a form showing both owners' SSN?]]

Nope...which only adds to the confusion. The brokerage (or the company) will issue any dividend/sale information ONLY to the first person listed on the account. And if BOTH people are required to report, then the first person must report the entire dividend/sale, (because that is how it'll be reported to the IRS...and you want your tax return to match with the IRS computers), and THEN that person will have to "back out" the portion that doesn't belong to him/her, and the SECOND person will have to report the appropriate portion on their tax return.

In fact, the IRS claims that the FIRST person must issue 1099 forms to the SECOND person in order to accomplish this transaction correctly. Another problem.

[[ Short of transferring the registration of
the stock so that there is only 1 owner, how do I pay all taxes and keep the
other owner from getting in trouble with the Feds?]]

If I were me, I would certainly consider taking the step of splitting the stock (or brokerage account) to the proper person and moving forward. It's just not easy to deal with these issues when non-married people become joint owners. The problems outweigh any benefits.

TMF Taxes
Roy

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Author: no2cat Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16000 of 121338
Subject: Re: Joint Stock Owners Date: 6/4/1999 1:49 PM
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Thanks very much for clarifying things. Now, where do I find out how to split the stock?

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