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Author: irasmilo 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 121312  
Subject: Re: how to split a joint account Date: 3/13/2014 7:35 PM
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Thanks so much to all for taking the time to reply. I really appreciate your help!

So - first to recap and clarify: The acct was opened with $24k cash - half mine half sis. $$ were invested in various stocks. No stocks were sold, and no dividends reinvested - but we'll worry about dividends later.

So . . my sister can take all shares of stock whose cost basis totals $12k (original amt) and transfer to her own acct - no questions asked. I can gift all of my shares of stock at once, 'cuz the original cost basis is $12k - less than current $14k max, and we can be done with the whole thing!


No! As I said when I posted, you got a lot of misinformation in the early replies. Your sister can take one half of the current value of the account since she contributed 1/2 of the opening capital. Half of the stocks and half of the dividends belong to her. Each of you should have been reporting 1/2 of the income each year on your personal tax returns. If the income was reported to you (your SSN primary on the account), you should have issued a nominee 1099 to your sister, or as I usually tell my clients, just enter the nominee information as "received as nominee for [name] [SSN]" and enter a negative amount on Schedule B.

Now, do I need to file any paperwork with anybody about gifting my $12k shares of stock? (aside from giving my sister the purchase paperwork).

If your gift is worth more than $14K (current value), then you must file Form 709, a gift tax return. If it's less than $14K, no paperwork needs to be filed with the IRS.

OK - this got tricky: Ira said: "Hondochica needs to know the cost basis of the stocks transferred to sister because sister will use that cost basis and holding period to determine any gain if she sells the stock. She will use the market value on the date of the gift to determine any loss if she sells the stock." OK - I can't quite figure out what you're saying here. And I wrote this long attempt to clarify, and then googled 'gifted stock basis' and discovered . . I don't want to tackle this now. It doesn't matter. I have the original purchase paperwork and will deal with it later!! so . .. nevermind! ;-))))

I took a shortcut. Just make sure she knows the purchase price and the current value of any stocks that you transfer to her from your half of the account.

Now. . . dividends . . which were cash deposits into the acct - no dividends used to repurchase stock. I doubt there is more than $2k of dividends in the account, perhaps I can just gift it all to my sister and still remain below the $14k for this year. OR do I have to figure out what dividends go with what shares when we 'split' the acct?

Money is money. She is entitled to 1/2 of the dividends because she is half-owner of the account. The other half will be included in your gift to her. Cost basis and market value of cash is the same. A dollar is a dollar.

thanks - I hope I have not further complicated this.

You have, because of the misinformation you were given.

Ira
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