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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: of 121341  
Subject: Re: Child's 1099-B Date: 2/1/2000 3:48 PM
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<<Last year my IRA manager advised me that I could reduce my taxes by withdrawing 1/2 of my 8yr old son's mutual fund (which was giving him dividends over $700) and invest the money in stocks like MSFT, AOL, DIS.>>

Ok...got it.

<< I did this and now I've received a 1099-B for the $4000 I redeemed,as well as the normal 1099-DIV, from my son's mutual fund.>>

Yup...and all of that information will have to be included in your son't individual income tax return for 1999. It's his money...it's his taxes. Now...there IS an option that you can use to report HIS earnings on YOUR tax return. You can read more about that in my series of articles on the "kiddie tax" in the Taxes FAQ area.

<<My question is how do I file the 1099-B for my son? Do I include it in my 1040 Section D, Capital Gains and Loses? Do I file a FORM 8615 (computation tax for investment of children under 14)?>>

Oops...sorry...I wasn't thinking there for a second. Since there were stock SALES involved...you have no choice. Your son will be required to complete his OWN return including Form 8615. So the sales will have to be on his return. You don't have the option of reporting them on your return.

<< I'm not sure how to treat this as I thought that by reinvesting my son's monies into stocks under his name was suppose to wash this. Am I missing something here?>>

When you sell, you have a taxable event. It makes no difference that you might have "reinvested" the money back into additional shares of stock. It's immaterial.

Hope this helps...
TMF Taxes
Roy
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