How do we apportion 1099 taxes on a jointly owner brokerage account?

[jake.intrator]

we are unmarried, but have a joint brokerage account. do we both need to pay taxes? or does only one person need to pay it?

[KarenJ]

Whose social security number or numbers are on the 1099?

If it is both, then you will need to split the income (which is the correct answer).  TurboTaxTom replied to a similar question that may help:

I'll make the assumption that your question is along the lines of "How do I nominee off gains and losses that are all being reported on a 1099-B under my name and social security number?"

The "official IRS-approved" method is to enter the 1099-B as it reads, then enter an "adjustment" (positive or negative) in column (g) of Form 8949 for the other owner's share and a code of "N" in column (f).

You cannot literally do this using the TurboTax interview method, though you can do this if you are using the desktop version and go into Forms Mode.  You might not be able to e-file.

You can do a very close approximation, however, if you enter the 1099-B as it reads, then tick the "Add More Details" box and click on the "Start" button.  On the next page you tick the first option of "I need to add or fix info about this sale that's on my Form 1099-B."  Tell TurboTax that the 1099-B shows an incorrect basis and in the following interview enter the basis figure that gets your personal gain or loss properly stated.  TurboTax will put this information into the Form 8949.  If basis WAS reported on the 1099-B the code will be wrong - a "B" - and if basis was NOT reported there will be no code.  But your income will be properly reported and that's what's really important.

Of course, you are supposed to provide a 1099-B to the nominee and to the IRS, but I expect as a practical matter this doesn't happen too often.

[umamiking]

Hi sorry to bring this up but I am in a similar situation. Why would you adjust the basis instead of adjusting the gain/loss? For example, if I am the primary on a joint account and have 55% ownership while the partner has a 45% ownership, wouldn't it be easier to just report 55% of the gain/loss amount? Adjusting basis sounds kind of tricky.

For example, say there's a cost basis of $100, a gain of $20 for total proceeds of $120. So updating the gain to be $11 (55% of $20) seems straightforward. Can you give an example of how you would adjust the basis to get the same result? By the way for 2022 Turbotax there doesn't seem to be an interview aspect for 1099-B. But you can edit each sale individually.

[GeorgeM777]

Your prior post dealt with nominee income/gain/interest, thus this response assumes the capital gain at issue relates to nominee capital gain, i.e., a capital gain realized by the account owner but part or all of that capital gain belongs to someone else.  

The instructions for Form 1040 provide that a nominee reports on line 7 of Form 1040, only that portion of the capital gain that belongs to them; however, the nominee must include a statement with their return showing the full amount and the amount received as a nominee.  TurboTax does not support the statement that needs to be included with the nominee's return.  Thus, it appears you may have to paper mail your return.

Here are the instructions for line 7 of Form 1040 that relates to nominees along with a link to the instructions.

If you received capital gain distributions as a nominee (that is, they were paid to you but actually belong to someone else), report on line 7 only the amount that belongs to you. Include a statement showing the full amount you received and the amount you received as a nominee. See the Schedule B instructions for filing requirements for Forms 1099-DIV and 1096.

Form 1040 Instructions

To the extent as nominee you also received interest and dividends, here are the relevant instructions for Schedule B along with the link to the IRS publication. 

Schedule B Instructions for 1099-INT and 1099-DIV:

Nominees. If you received a Form 1099-INT that includes interest you received as a nominee (that is, in your name, but the interest actually belongs to someone else), report the total on line 1.  Do this even if you later distributed some or all of this income to others. Under your last entry on line 1, put a subtotal of all interest listed on line 1. Below this subtotal, enter “Nominee Distribution” and show the total interest you received as a nominee. Subtract this amount from the subtotal and enter the result on line 2. 

Nominees. If you received a Form 1099-DIV that includes ordinary dividends you received as a nominee (that is, in your name, but the ordinary dividends actually belong to someone else), report the total on line 5. Do this even if you later distributed some or all of this income to others. Under your last entry on line 5, put a subtotal of all ordinary dividends listed on line 5. Below this subtotal, enter “Nominee Distribution” and show the total ordinary dividends you received as a nominee. Subtract this amount from the subtotal and enter the result on line 6.

Schedule B Instructions

@umamiking 

[fanfare]

if you are splitting your gains then you are splitting your costs also.

the cost basis per share is the same for both of you. multiply the cost per share by the number of shares you are reporting.

same for the gain or (loss).