Hi all - I sold some stock from an account that is in my name, but *belongs* to my sister and me (proceeds from our mother's estate). The funds went to my sister, and I was told I could transfer the tax liability to her. I see a way to transfer interest or dividends, but not how to show the income as hers rather than mine.
Help? Thanks so much,
Deborah in San Diego
If the account belongs to both you and your sister, presumably 50/50, then half of the proceeds from the sale is yours and half is hers. If all of the money went to her, half of it was a gift from you. You can't transfer the tax liability for your half of the gain to your sister.
After you enter the stock sale in TurboTax, a few screens later you will come to a screen that says "Select any less common adjustments that apply." On that screen, check the box that says "Some (or all) of the proceeds from this sale do not belong to me." It will give you a box to enter the adjustment. Enter half of the gain (not half of the proceeds) as a negative number. The sale will be reported on Form 8949 with adjustment code N in column (f) and the negative adjustment that you entered in column (g). Your half of the gain will be in column (h) and will flow to Schedule D. Adjustment code N means that you received the 1099-B for the sale as a nominee for the actual owner.
Your sister has to report her half of the sale on her tax return so that she pays the tax on her half of the gain. She does not need a Form 1099-B in order to report it. She does not report the gift from you on her tax return, and she does not pay any tax on it.
If your half of the proceeds, which you gave to your sister as a gift, is more than $17,000 (for 2023) you have to file a gift tax return, Form 709. You will not have to pay any gift tax unless you have made lifetime gifts of more than $12.9 million, but you have to file the return. Your lifetime gift and estate tax exclusion will be reduced by the amount of the gift. You cannot file a gift tax return with TurboTax.
For the future, it would be cleaner if you split the brokerage account into two accounts, one belonging to you and the other to your sister. That should have been done when the assets in your mother's estate were distributed.
also, any income earned in the account would be a 50/50 split for income tax purposes. If you don't want the 50% that is yours, you can gift your interest to her. Most likely the value would require filing a gift tax return. If this is done in the same year as the sale you would only file 1 gift tax return showing the gift of proceeds and the gift of your share of the assets in the account.
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