You do not give the other owner a copy of your 1099-INT or 1099-DIV. You issue a new 1099-INT or 1099-DIV as if you are the payer of the interest or dividend. In your example, you would issue a 1099-INT for $400 to the actual recipient.
Form 1096 is a transmittal form that you, as the issuer of the 1099-INT or 1099-DIV, send to the IRS along with copies of the 1099-INT and 1099-DIV forms that you issued.
The following are from the IRS instructions for Schedule B.
"If you received interest as a nominee, you must give the actual owner a Form 1099-INT (unless the owner is your spouse) and file Forms 1096 and 1099-INT with the IRS. For more details, see the General Instructions for Certain Information Returns and the Instructions for Forms 1099-INT and 1099-OID."
"If you received dividends as a nominee, you must give the actual owner a Form 1099-DIV (unless the owner is your spouse) and file Forms 1096 and 1099-DIV with the IRS. For more details, see the General Instructions for Certain Information Returns and the Instructions for Form 1099-DIV."
You may need assistance from a tax professional to correctly file these forms. The tax professional might be able to file them with the IRS electronically.
The deadline for filing Forms 1099-INT, 1099-DIV, and 1096 with the IRS was February 28 if filing paper forms, or March 31 if filing electronically. The penalty for filing more than 30 days late is $130 per form.
See the General Instructions for Certain Information Returns for more details about the filing requirements.
