Poor Child!!

[Unregistered]

Clients has one child. He had custodian account with a broker in 2005. He closed the account and there was a loss of $7,000. This custodian account had Child's SSN #.
Child, 13 year old, does have some $3,000 earned income as he helped his father, sole propriter.

Client himself sold some stocks thinking that he would offset gain with the loss with the account that he had with broker (Client forgot that broker account was a custodian account and had his child's ssn # and not his!)

2005 ended and he got 1099B for broker account as well as his own 1099B for his stock sale?

Questions.

(1) Can he offset loss? - Stock sale in his ssn # while loss in his 13 year old child's ssn#

(2) Can he elect 8814 - only for interest and dividend - may not apply to cap loss

(3) Can he use "nominee" strategy?

Thanks!

[Unregistered]

Since this is a custodian account, parent can claim capital loss against their income evethough child's ssn # is on 1099B.

Let's see what other people on this board have to say.

[Unregistered]

You can do nominee distribution from your child to you and the deduct loss on your return.

Some one on the board may know about Nominee process.

[Unregistered]

No, no, no - don't agree

Only INCOME from a child under age 14 can be reported on the parent's return. The child was the legal owner of that brokerage account, parent only serves as custodian. You can't take someone else's losses on a tax return.

[Bees Knees]

TTB, page 12-10, "If the child has any other type of income or received Form 1099-B, the parents cannot make the election. A return must be filed for the child."