Need to report child's investment proceeds and loss?

[David]

TP's minor child received a 1099 from their broker with ~ $300 of dividends and $5,654 of gross proceeds from sale of stock. The stock sale generated ~ $2,700 of loss.

Does this need to be reported on the parent's or the child's income tax? I think if nothing is reported and this is ignored, the TP will receive a letter from the IRS.

Thanks for your help.

[Lynn EA USTCP in Louisiana]

Child's return - capital gains and losses of a child are not reported on the parent's return. The child must file his/her own tax return for these types of transactions.

Lynn Jacobs, EA, NP

Kenner, LA

[David]

lYNN,

Thanks for your response. Their other child only had around $300 of dividends and interest. Since that is less than $950 they don't have to report this child's dividends/interest on either the child's or the parent's tax return - correct?

Thanks.

Child's return - capital gains and losses of a child are not reported on the parent's return. The child must file his/her own tax return for these types of transactions.

Lynn Jacobs, EA, NP

Kenner, LA

[Pacun]

To the eyes of the IRS, the child made $300 of dividends and $5,654 by selling stock. If you want to avoid the possibility of a letter from the IRS, you should file a return for the child.

[Randall]

To the eyes of the IRS, the child made $300 of dividends and $5,654 by selling stock. If you want to avoid the possibility of a letter from the IRS, you should file a return for the child.

Also to carry the loss forward.

[David]

I must have not been clear in my previous post. There are 2 children with different amounts of investment earnings.

Their OTHER CHILD, not the same child that had $5K of stock sales, had $300 of dividends and interest. Since this is less than $950, no tax return needs to be filed for the OTHER CHILD nor does the $300 of dividends and interest need to be reported on the parent's tax return - correct?

Thanks.

To the eyes of the IRS, the child made $300 of dividends and $5,654 by selling stock. If you want to avoid the possibility of a letter from the IRS, you should file a return for the child.

[jainen]

>>Since this is less than $950, no tax return needs to be filed for the OTHER CHILD nor does the $300 of dividends and interest need to be reported on the parent's tax return - correct?<<

No time for questions in April! It's not so bad for you to ask, but the parents are going to ask too and it will take you longer to explain it than to just show them the finished returns with no tax due!