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Author: donstim Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Taxes and Joint Accounts Date: 12/24/1998 1:07 PM
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I have two joint brokerage accounts with another individual. Tax reporting by the brokerage is done under my name and taxpayer ID number. IRS publications are quite clear in how to pass on nominee dividend and interest distributions (I'm to file forms 1099-DIV and 1099-INT for the nominee distributions), but I cannot find any information on how to pass on the capital gains/losses. Is there a form to file, or do we just make notations on our respective Schedule D's?

Happy holidays and thanks for any help you can provide,

D. Stimson
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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: 7586 of 121061
Subject: Re: Taxes and Joint Accounts Date: 12/26/1998 1:29 PM
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[[I have two joint brokerage accounts with another individual. Tax reporting by
the brokerage is done under my name and taxpayer ID number. ]]

owch...what a pain YOU'LL be in for...

[[IRS
publications are quite clear in how to pass on nominee dividend and interest
distributions (I'm to file forms 1099-DIV and 1099-INT for the nominee
distributions),]]

Right...interest and dividends are easy. I can only imagine your next question...

[[ but I cannot find any information on how to pass on the capital
gains/losses. Is there a form to file, or do we just make notations on our
respective Schedule D's?]]

Here is the problem. ALL of the transactions have been reported to you under YOUR social security number. So YOU will have to report all of the transactions on your tax return so that the IRS computers will be able to verify gross sales information provided to them by your broker.

THEN you'll have to back out HALF of the sales/gains/losses...either one by one or as a group. Then the other JT on the account will be required to report their share of the sales. You should actually issue Form 1099B to the second joint tenant (for their half of the sales proceeds), but I doubt that you'll end up doing this.

I hope that there is a VERY good reason to go through this again and again, year after year. And what happens if the JT wants to make an additional $20k investment into the account, and you don't have anything else to invest. You are now no longer 50/50 joint tenants, and the computations are even uglier.

Which is why there are no IRS Publications dealing with this issue. It just isn't anticipated by the IRS. Most JT accounts are held by married individuals. And there are other methods that can be used for estate tax purposes to designate a beneficiary so that JT accounts are not required for other purposes.

That's really the best information that I can provide..
TMF Taxes
Roy

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Author: donstim Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7604 of 121061
Subject: Re: Taxes and Joint Accounts Date: 12/26/1998 4:19 PM
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You are so right on in your answer (as far as what a pain it is and asking why I am putting myself through this) -- what a great response!

This joint account is with my "significant other." I can't say that I've got a "VERY GOOD reason" to go through this year after year, but then there are a lot of things I can't explain! Anyway, I HAVE been doing this for a number of years already. I just wanted to see if what I was doing was halfway "right." And no, we don't have equal amounts or even necessarily all the same stocks, so I've already been doing more complicated calculations than just taking 50% of all the gains/losses. It's not so bad with a computerized tax program, which is one of the things that drove me to start using one a few years ago.

You're right, I probably won't go to the trouble of issuing her a 1099B. I'll probably just continue including an explanation of what I'm doing along with my tax forms. (A better idea might be to change the account ID # over to hers, since she's in a lower tax bracket, and report it all on her return and at her tax rate!)

Thanks again and have a Happy Holidays.

Don S.

----------------
[[I have two joint brokerage accounts with another individual. Tax reporting by
the brokerage is done under my name and taxpayer ID number. ]]

owch...what a pain YOU'LL be in for...

[[IRS
publications are quite clear in how to pass on nominee dividend and interest
distributions (I'm to file forms 1099-DIV and 1099-INT for the nominee
distributions),]]

Right...interest and dividends are easy. I can only imagine your next question...

[[ but I cannot find any information on how to pass on the capital
gains/losses. Is there a form to file, or do we just make notations on our
respective Schedule D's?]]

Here is the problem. ALL of the transactions have been reported to you under YOUR social security number. So YOU will have to report all of the transactions on your tax return so that the IRS computers will be able to verify gross sales information provided to them by your broker.

THEN you'll have to back out HALF of the sales/gains/losses...either one by one or as a group. Then the other JT on the account will be required to report their share of the sales. You should actually issue Form 1099B to the second joint tenant (for their half of the sales proceeds), but I doubt that you'll end up doing this.

I hope that there is a VERY good reason to go through this again and again, year after year. And what happens if the JT wants to make an additional $20k investment into the account, and you don't have anything else to invest. You are now no longer 50/50 joint tenants, and the computations are even uglier.

Which is why there are no IRS Publications dealing with this issue. It just isn't anticipated by the IRS. Most JT accounts are held by married individuals. And there are other methods that can be used for estate tax purposes to designate a beneficiary so that JT accounts are not required for other purposes.

That's really the best information that I can provide..

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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: 7622 of 121061
Subject: Re: Taxes and Joint Accounts Date: 12/27/1998 10:31 PM
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[[You're right, I probably won't go to the trouble of issuing her a 1099B. I'll
probably just continue including an explanation of what I'm doing along with my
tax forms. (A better idea might be to change the account ID # over to hers, since
she's in a lower tax bracket, and report it all on her return and at her tax rate!)]]

Careful now, Don. You don't want to be playin' fast and loose with the tax ID numbers. Uncle Sammy might start asking questions about how your "other" came upon all of these riches of investments on her meger income. And then you would have some REAL 'splaining to do.

Keep doing what you are doing, make the computations, and trying to arrive at the correct "split".

Either that or marry the gal :-)

[[ Thanks again and have a Happy Holidays.]]

Have a great New Year, Don.

TMF Taxes
Roy

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Author: donstim Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7914 of 121061
Subject: Re: Taxes and Joint Accounts Date: 1/3/1999 7:14 PM
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[[Careful now, Don. You don't want to be playin' fast and loose with the tax ID numbers. Uncle Sammy might start asking questions about how your "other" came upon all of these riches of investments on her meger income. And then you would have some REAL 'splaining to do.

Keep doing what you are doing, make the computations, and trying to arrive at the correct "split".

Either that or marry the gal :-)]]

Roy, you crack me up! No need to respond to this, but I just nominated this for a good post award.

By the way, my girlfriend saw this and told me to tell you that she doesn't have a "meager" income!

Don S.

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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: 7945 of 121061
Subject: Re: Taxes and Joint Accounts Date: 1/3/1999 10:49 PM
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[[Roy, you crack me up! No need to respond to this, but I just nominated this for
a good post award.]]

Lucky ME, Don....

[[ By the way, my girlfriend saw this and told me to tell you that she doesn't have a
"meager" income!]]

Lucky YOU, Don...

I enjoy your posts also, Don. Thanks for the compliment, and I hope to see you in the folder for many years to come. And don't forget the FAQ area. Check in with it on a weekly basis to keep up with any changes or other tax issues that might be of interest to you.

TMF Taxes
Roy

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Author: cheerful Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25016 of 121061
Subject: Re: Taxes and Joint Accounts Date: 1/14/2000 2:25 PM
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I am in the same mess as I opened a joint account without considering the tax effect and I am required by law to file separate return. I live in New York (non-community property).

Could you please kindly explain how to report the split? Roy mentioned "BACK OUT" several times but never explained how it works. You help will be greatly appreciated.

Thanks!

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Author: cheerful Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25020 of 121061
Subject: Re: Taxes and Joint Accounts Date: 1/14/2000 3:06 PM
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In message #7064, you mentioned "back out HALF of the sale/gain/losses". Could you please explain how to "back out"? Thanks!

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Author: phooley Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25025 of 121061
Subject: Re: Taxes and Joint Accounts Date: 1/14/2000 3:27 PM
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cheerful,

In message #7064, you mentioned "back out HALF of the sale/gain/losses". Could you please explain how to "back out"?

I think you mean post #7586, which was written by Roy (TMFTaxes).

You may have been looking at post #7604, which is an additional post in that previous thread, directed back to Roy (who then responded in post #7622).

I think I can help with these post numbers, but I don't feel qualified to comment on your basic question about "backing out" -- I'll leave that for the "content experts!"

Hope this helps/clarifies!
Phooley

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