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I have a question involving a purposed sale of stock held jointly with my sister and more precisely what my options are concerning the reporting of the capital gain.

In 1996 my sister and I were issued a paper stock certificate as Joint Tenants with Rights of Survivorship (JT TEN) while finalizing our parent's estate. From the beginning I feel this was a mistake and the shares should have been split up, two separate certificates issued and the last odd share distributed via cash payment to each of us. But that is not what happened.

Today, nine years later my sister has blown her inheritance and needs the cash. The problem I am facing is that my SS# is the only one on record so any sale of all or partial shares will fetch me a capital gain. I personally would like to transfer my half of the shares to my broker and sell hers.

E*trade's response to this question is:

“Our records show you are the primary holder in your joint account with your spouse. If you deposited the certificate in your joint account you would be liable for the capital gain.

If you and your sister opened a joint account with her as the primary and you as the co-holder and deposited and sold the stock your sister would be liable for the capital gains. If you do not want to open an account to match the registration of the certificate your sister can open an individual account in her name and when you send the stock certificate you need to include a notarized letter of authorization from you authorizing to relinquish the shares. Once she sells the stock she will be liable for any taxes regarding the shares.”


The first response seems the best for my situation considering my sister does not want to open an account. So should I just sell her half and withhold 5% for the expected long term capital gain I would have to pay next year?

Thanks for any help,
Kurt
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