taxes on joint acct transfer to individual

Submitted by Douglas Bauerband on Tue, 2018-03-27 16:19

Clients have Joint account (not married) worth 94k.

The one client (who is the registered as the first name, is giving the other the total amount of the account.

a. does any gifting form have to be sent into the IRS?

b. The one client who is giving the money to the other is the first name on the joint account and will pay any capital gains or interest, correct?

c. The one who is receiving the money does not have to file any thing is that correct?

thank you,
Douglas



Submitted by Alan - IRA critic on Tue, 2018-03-27 17:08

  • If the value of the gifting client’s share exceeds the 15k gift tax exclusion (2018), they must file a 709 with the IRS.
  • No. The account custodian will issue the 1099 form to the remaining owner assuming the account is re registered by year end. That remaining owner can then use the nominee process to transfer the value of paid interest or capital transactions done PRIOR to the date of transfer. All transactions after the date of transfer are reported by the new sole owner. The new owner acquires the basis of the former owner under the complex basis transfer rules depending on whether there is a gain or loss upon sale of assets. Therefore, if an investment is sold for a gain by remaining owner, that remaining owner will pay all the cap gains from when the asset was purchased.
  • Nothing required other than reporting per the 1099 forms received in the future, plus possible nominee adjustments if there are transactions done this year before the account transfer date.

Submitted by Douglas Bauerband on Wed, 2018-03-28 23:18

she took her share of the money so his kids wouldn’t get it if something happened to her first.  He kept the balance in the account but it is still under a joint account as before.

Submitted by Alan - IRA critic on Thu, 2018-03-29 01:19

They are not married, so the ownership shares are not necessarily 50-50. It would be based on the % that each contributed to the account. DId she take out more than her share of the account? If so, the excess would be a gift. If not, then her remaining share of the account would just be reduced by the amount that she withdrew. 1099 forms will still be reported under the same name, but that person can use the nominee procedure to split the tax impact if necessary.

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