- quote -

Assuming you have no other investment income this year, you
get a deduction of $800 making that much tax free. The rest
will be taxed at 5% as long term capital gains, if you held
the stocks for a year. If your remaining profits are $1200,
you will owe $60 taxed as long term capital gains. If less
than that, they will be taxed as ordinary income at 10% or
$120.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Douglas Harrington" <RIWS[at]MSN.COM> wrote:

- quote -

All email trade confirmations come with 'Dear Susan L.
Harrington, " at the top (my mothers name). I know this
does not mean anything, but I havn't received my account
statement yet (just opened a few weeks ago). I emailed the
broker asking about this tax situation, should get a reply
some time tomorrow.

I don't see UGMA or anything on the account other than
'Account Type: Custodial' when I bring up my account online.
Also, my account is listed as:

--
Account Name: Susan L Harrington
Account Title: Susan Harrington Custodian for Douglas Harrington

--
Doug

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

"Douglas Harrington" <RIWS[at]MSN.COM> wrote:

- quote -

Got a reply via email from my broker. I am responsible
for the taxes and I file them, not my mother. I printed a
couple forms and think i'm all set now. When I cash out on
the stocks I had originally planned on splitting the gross
profits 50/50 to reinvest and save if the profits are under
$2000, if over that amount, $1500 to reinvest and the rest
to save (and I will pay the taxes with the money saved).

Doug

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

Douglas Harrington wrote:

- quote -

An UTMA account is legally yours, and the activity should be
reported in your SSN. It all goes on your tax return,
regardless of the fact that the account has your mother's
name on it.

- quote -

All sales are reportable. You are required to file a return
if your gross proceeds are greater than $800 (the amount of
unearned income that triggers the filing requirement for
those who can be claimed as a dependent in 2004).

You won't owe tax unless your profits are over $800, but you
have to file anyhow.

- quote -

List all your transactions, regardless of how much or little profit you
made.

- quote -

They aren't her losses, so they don't go on her return.

- quote -

The long-term cap gains rate is 5% for people in the 15%
bracket, and 15% for everyone else. When you fill out Sch
D, the tax will be calculated as part of the form.

- quote -

Taxes aren't deductions from profits. You'll fill out your
tax returns, and pay the tax calculated on them.

- quote -

If it's an UTMA account, your SSN (not hers) should be on
it. If it's a joint tenancy account, but all the money is
yours, all the activity is reported on your return. If the
1099 comes with her SSN, she should issue you a nominee
1099.

- quote -

If the money all came from you, and all went to you, there's
no gift issue.

Phoebe

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

So, I assume it is your money and the account has your SSN
on it. If not, it should have your SSN on it.

- quote -

Nothing is taxable until you sell it. If you sell it in
less than a year, it is short term capital gains, taxable as
ordinary income. If you keep it longer than a year, it will
be taxable as long term capital gains, most likely at 5% if
you don't have much other income. But even before that, you
get an $800 exemption for investment income before anything
is taxed.

If you have losses, they can help offset other income up to
$3000.

- quote -

If you total income is less than $800, don't bother to file.

- quote -

The whole idea of you owning the assets is the assumption
that you have a lower tax rate than your mother.

- quote -

5% or 15% depending on your income. Most likely for you 5%
and in 2008, 0%.

- quote -

Don't know, I am in Ohio but if you don't have to file a
federal return, it is unlikely you will owe Taxachusetts.

- quote -

The key point is whose SSN is on the 1099DIV issued at the
end of the year. If it is your account and your mother is
just the custodian, the SSN should be yours.

- quote -

Your mother can give you up toe $11,000 a year with no gift
tax implications but once given, she can't take it back. If
this really is your money, then it is not a gift.

- quote -

Just because your mother is the custodian does not mean you
can't have the account in your name and file your own tax
return. There is a big difference between a joint account
and a custodian account. Joint account owners each own half
a share of the account. A custodian can act for you but
owns nothing.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

- quote -

The first dollar of gain is taxable; however, you don't have
a loss or a gain until you complete a sale of the property.
You could hold the stock until you're 65 and not have any
gain or loss to report until that time. Interest and
dividends would be reportable on a yearly baiss.

Carol
What can one expect of a day that begins with getting out of bed.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

RIWS[at]MSN.COM (Douglas Harrington) writes:

- quote -

You are saying that the brokerage account is registered as a
Uniform Trust for Minors Account (or Uniform Gift to Minors
Account) [UTMA/UGMA] with you as the minor and your mom as
the custodian?

If so, the account is *already* yours (though you don't have
full control of it), all tax reporting by the brokerage
should be in your name and under your SSN, all income and
loss is yours, and all of the tax consequences fall solely
on you.

Or are you saying that you and your mother are joint tenants
on the brokerage account? That's very different than an
UGMA/UTMA. Tell us how the account is actually registered.
Look at your most recent statement, up at the names? Do you
see something like "Joint Tenants" or "JTWROS"? Or do you
see something like "UGMA" or "UTMA"?

- quote -

Assuming you have no other income, $750.

- quote -

NO! You list the gain or loss on *all* sales on Schedule D
no matter what the ultimate gain or loss is. The tax
computation lines of Form 1040 and Schedule D will take care
of making sure you're not taxed if your income is low
enough.

- quote -

Assuming this is an UTMA/UGMA account, she CANNOT do that.
All income/loss is yours, not hers.

- quote -

For a long-term capital gain it is 5% to the extent you are
in the 10% or 15% bracket, 15% otherwise. For a short-term
capital gain it is whatever tax bracket you are in.

- quote -

First, keep in mind that the MA tax on short-term cap gains
is 12% (tax on long-term gains is 5.3%).

Second, you make no such deductions. Just fill out the MA
tax forms following the instructions. The form will deal
with computing the appropriate amount of tax.

- quote -

That conflicts with your statement that this is a custodial
brokerage account. An UGMA/UTMA account does its tax
reporting in the *minor's* name and under the *minor's* SSN.
The custodian is nowhere involved in that respect.

So which is the brokerage account? A custodial account or a
joint account? Those are not the same things. Look at the
account statement. How is it titled? Does it mention
"UTMA" or "UGMA" near the name(s)?

- quote -

As a logistical note, why transfer funds out of the
brokerage account into the checking account in the first
place?

- quote -

A custodial account is already your individual account. The
money in such an account belongs solely to you (the act of
someone else placing money in an UGMA/UTMA irrevocable gifts
that money to you), the income and loss from it belongs
solely to you, all the 1099s, etc. are issued in your name
and SSN.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

RIWS[at]MSN.COM(Douglas=A0Harrington) asked:

- quote -

Until you sell, there's no tax due -- even though your stock may rise in
value. That would be what are known as "paper profits" -- with no
taxes, since no gain has been *realized*.

When you _sell your holding, a taxable event will take place: it may be
a gain or a loss, depending on the stock's price at the time.

However, there is a standard deduction ($3,100 in 2004) below which no
tax is due -- although you will still have to file a return if your
income comes from capital gains. That is because the IRS will receive a
report only on the _proceeds you received from the sale. It is up to
you, to report (on Schedule D) the original date of purchase and cost
basis, as well as the date of sale and proceeds. IRS will match the
proceeds amount from your broker's 1099-B reports.

This is vital, since you could sell some stock for $10,000 -- but have
_no gain, if it cost you $10,000. And it is *your* responsibility to
keep the records and report this data.

- quote -

From the earlier response, you should realize that _proceeds are the
key. Any 1099-B (proceeds) items listed, will have to be explained by
reporting.

- quote -

You and your mother should determine exactly *who* owns the funds in
your account. It is perfectly reasonable for *you* to be the owner, but
if your mother is truly the owner (and you're just the "trader" -- then,
she could deduct capital losses, if any, from her gains (or up to $3,000
from ordinary income).

- quote -

"Capital gains" can be short term (investments held for less than a
year) or long term (investments held at least a year, or longer). Short
term gains are taxed as ordinary income. For long term gains, the tax
rate starts at 5% -- for those in the 10% or 15% brackets -- up to 15%
as a maximum for "most net capital gains."

- quote -

Whoops! Basic misunderstanding here. Your "profits" or "gains" are
calculated based on your cost vs proceeds from sale. The difference is
either a gain or a loss. If a gain, _that is your profit. It is on
that amount that your taxes will be calculated -- and there may be
*none* due, if your total income is low enough.

In any event, each taxing entity -- federal or state -- may claim a
percentage of gains. If both do, then the two taxes together would add
up to a reduction in your "net profit after taxes."

[Disclaimer: My knowledge of Massachusetts tax law is limited to the
fact that the state is sometimes known as "Taxachusetts." <G
- quote -

See earlier answer. But Yes, she *could* -- if you mutually decide
she's the owner of the account.

- quote -

There is no gift tax ever due from the *recipient* of the gift. (That
would be _you, in this case.) And, in any event, there is no gift tax
due on an amount of $11,000 or less in any given year -- for each
person. (In other words, your mother could give you $11K, and your
father another $11K -- and no tax would be due. When the amount rises
above that level, the consequences apply to the _giver of the gift. You
can safely assume the issue is "above your pay grade" ... and if your
parents are that generous, they probably have a tax and estate advisor
-- or should consult one.

- quote -

Age doesn't make taxes easier. But it's a good time in your life to
start the process of learning how they work -- currently. Maybe, just
maybe, you might be part of the generation that really does change tax
law. (Learn about ideas such as the *Flat Tax* of *Fair Tax* ... both
of which you could Google, if you're interested.)

Bill

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

I have been referred to this group from misc.invest.stocks...

I am 15 years old and opened a brokerage account with my
mother as custodian. I transferred money from a checking
account with my name/my mothers name on it to the brokerage
account (cash is kept in a money market fund).

On April 13th I bought 780 shares of ALMI at $0.235. I am
planning on buying another 1000 or so shares next week.

- What is the profit amount at which my gains become
taxable?
- If my profits are less than the amount at which they
become taxable, do I not list them at all on the capital
gains/losses form?
- Can she benefit from listing capital losses on the form?
- What is the federal tax rate on capital gains? (I think
it's 15-20% but not sure)
- I live in Massachusetts, do I simply add the state capital
gains tax to the percentage of the fed tax and then make
the appropriate deductions from my profits?
- Both my mothers SSN and mine are on the brokerage account
(and checking account), I do not have a taxable income at
this time. Would she be filing the capital gains/losses
on her taxes?
- When I transfer the funds out of the brokerage account to
the checking (both accounts have both my name and my
mothers name on them), will the cash be considered a gift
if *I* then write and sign checks using those funds, or
must she make a withdrawl in *her* name and then I
re-deposit the cash to the same checking account in *my*
name to avoid the gift tax?

Thanks, this would be a lot easier if I were over 18, I
could have just opened an individual account and filed it on
my own taxes.

Doug

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->