1098-B income for child

[Janitor Bob]

My client is the custodian of the brokerage account for her young grandson. Client received a 1098-B (gross proceeds $1,078.98). Recipient's name is my client, Custodian FBO "grandson's name". Recipient's identification number is grandson's SSN.

Does my client's grandson need to have a return prepared for him since this unearned income is over $950?

[Jack from Ohio]

My client is the custodian of the brokerage account for her young grandson. Client received a 1098-B (gross proceeds $1,078.98). Recipient's name is my client, Custodian FBO "grandson's name". Recipient's identification number is grandson's SSN.

Does my client's grandson need to have a return prepared for him since this unearned income is over $950?

Yes. After you enter basis, his earnings most likely will be near $0, so no tax consequences to the child or the parents. If you do not file the return, an CP2000 will be in the grandson's future.

[Janitor Bob]

Thanks...that's what I figured.

[Randall]

And if a loss, carry forward. Inform grandparents, parents, to keep copies.

[mcb39]

Thanks....One of my clients' minor children received a K-1 with income from a Trust and I had no clue what to do with it. Is that the same situation.? , trust set up by Grandparents.

[Lion EA]

Yep, child files a tax return.

[Janitor Bob]

this was not a "covered" sale, so no cost is stated on the 1099-B.....Should I tell grandmother to contact the broker for cost information?

[Jack from Ohio]

this was not a "covered" sale, so no cost is stated on the 1099-B.....Should I tell grandmother to contact the broker for cost information?

YES. The broker get paid every year the investment is in their company, so it is (in my mind) the least the broker can do for their paying customer. These brokers act like providing basis is something new....

[Janitor Bob]

Received cost information from broker today. Gross proceeds were $1,079, but cost was $1,087....-$8. So does child need to file a return based on gross proceeds or not since income not above $950..excuse the dumb question, but I do not want child to get a letter for non-filing. and I am confused as to what they consider gross income.

The tax side of me believes that since AGI is less than $950, No filing required,

The bookkeeper side of me sees gross proceeds of $1,1079 as gross income

[jasdlm]

In my opinion, you still need to file . . . all IRS has is $1,079, so as far as they are concerned until you tell them otherwise, income is $1,079.

[Jack from Ohio]

I stand on my original statement, based on experience.

[Janitor Bob]

Thanks....returns have been prepared....turns out there are 4 kids...all with the same gross proceeds....so 4 returns to file

[Lion EA]

And, four returns to charge for!

[Kea]

At least they are pretty easy & can be done on auto-pilot!