"In other states gains on assets that are jointly held can be allocated any way you like, but gains on assets held in one name only must be reported on the owner's tax return."
My wife and I live in Australia, a common law (not community property) country. I am a US citizen, and she is (a USA) Non-resident Alien (NRA). She never files a USA tax return (only an Australian return); I always file an Australian return, and a USA 1040, "Married, Filing Separately".
Over time, my wife has accumulated (almost) all of our assets (except my wallet 🙂 ) in her name only. (I am the perfect spouse.) This causes the related income to be only taxed by one tax regime (Australia) and not two (Australia & USA). (For assets I hold, it's like walking through a two mine fields at the same time. (If I were on my death bead, I might prefer that.))
Enough silliness:
We recently opened a joint bank account, and then opened a related joint share trading account. We agreed that all income and gains or losses would accrue to the individual who provided the funds.
My wife then transferred some of her Australian dollars into the joint bank account, and she then bought a small parcel of Australian stocks. A dividend was received and deposited it into the joint account. She then sold the little stock parcel and experienced as small loss ($A 20 or $US 15).
BOTH Australia and the USA allow for bank (and bond) interest, and dividend payments, to be attributed to the individual funding the account.
I have obtained a private ruling from the Australian Tax Office indicating that gains or losses from shares can also be attributed to the single individual who provided the funds.
For US tax purposes, I have been unable to find if capital gains/losses can also be attributed in the same way,
and have prepared (but not sent) a Determination Letter.
Your comment (reproduced above) was made from the perspective of the readers being wholly within the USA, so might not apply for individuals outside the country.
Can you point to a source which discusses the splitting of capital gains and losses further? I'd like to be able to put the best argument forward to the IRS in my DL.
