Who pays tax for minors stock sale

[michblock]

I am a FBO for $17,000 of stocks. I withdrew the money and received a check in my parents name. One check was a little over $10,000 and the rest were approximately $3,000 or less.

Who's responsible for this money & how do taxes work for this sale?
Do my parents claim it as income? They'll cash it and give it to me as cash so are they obligated to report this?
Should they cash the $10,000 check separately from the rest?

 

[tranquility]

If the parent's elect to place the amount on their return, they are. If not, the child is--at the parent's tax rate.

 

[LdiJ]

If the parent's elect to place the amount on their return, they are. If not, the child is--at the parent's tax rate.

If the check was in his parent's name, its likely that the 1099-B would be in his parent's name as well.

 

[tranquility]

the check was in his parent's name, its likely that the 1099-B would be in his parent's name as well.

Even if true, so? How does that change who is responsible for the tax?

 

[TinkerBelleLuvr]

The key is whether this account is setup under UGMA. If so, it would have the social security of the minor. I know that when I bought/sold stocks in the children's accounts, I was required to file returns. Now, I used their "gains" to pay for the associated taxes since it was always to increase their account sizes.

 

[LdiJ]

Even if true, so? How does that change who is responsible for the tax?

Only that its always a hassle to report a 1099-B in any name other than the name on the 1099-B

 

[TinkerBelleLuvr]

If the check was in his parent's name, its likely that the 1099-B would be in his parent's name as well.

The checks for my children accounts always came in my name, even though they were the children's accounts. They were tied to the children's social security numbers. The 1099-B's were in the children's names.

 

[tranquility]

My experience with most of the FBO accounts is the same as Ginny J's, the 1099 has the SSN of the person the account is being held for. On the 1099-B, I don't know if it's a correct reporting, but I just put the amount in the appropriate place on Schedule D and put the next line, "As Nominee" and put in negative numbers for the same amount. As far as I'm aware, we haven't even got any letter audits on the reporting.

 

[LdiJ]

My experience with most of the FBO accounts is the same as Ginny J's, the 1099 has the SSN of the person the account is being held for. On the 1099-B, I don't know if it's a correct reporting, but I just put the amount in the appropriate place on Schedule D and put the next line, "As Nominee" and put in negative numbers for the same amount. As far as I'm aware, we haven't even got any letter audits on the reporting.

I like that. Its much simpler than the way our office has been handling it.