Nominate capital gain

[NotEasy]

David formed a partnership with two other persons for currency trading.

But the trading account was opened under David's SSN.

So the Form 1099-B has been issued to David.

I am thinking to first report all the transactions on David's individual tax return in order to match the computer records. And then David will nominate the overall capital gain from the transactions to the partnership.

Which form would you use to nominate the capital gain to the partnership? I am thinking to use Form 1099-DIV and put the total capital gain in box 2a.

Opinion?

[Burke]

You have to report the gains on Sche D under the SSN. Only way to go from that point, IMO, is to show basis same as proceeds to zero out, with explanation attached, including partnership's EIN so it can be traced. The nominee-dividend thing is going to make it more confusing and may cause unintended consequences.

Another thing to be careful about in these type situations, is that you are technically transferring income to another entity which is illegal unless it is to correct an error. Do you have a copy of the partnership agreement? Does the date of the partnership agreement look legitimate in regard to the transactions? Were any funds actually dispersed to the partners? The account should definitely be changed, but just cover your bases in the meantime.