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    lawanwadee's Avatar
    lawanwadee Posts: 3,653, Reputation: 124
    Immigration Expert

    Mar 23, 2011, 03:00 PM
    How to report income tax on joint brokerage account
    John and Mary are friends, both are single. They opened a joint account with a stock broker.
    They made some profits. How do they report income on this amount?

    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,784, Reputation: 846
    Senior Tax Expert

    Mar 24, 2011, 08:27 AM
    I am going to give you the benefit of the doubt and assume this is NOT a homework question.

    The answer is, it depends!

    If John did his own stock transactions and Mary did her own stock transactions, they would report the specific transactions on their own Schedule D on their individual tax returns, reporting the profits/losses and paying the appropriate tax.

    If they pulled their money and bought and sold stocks TOGETHER, they would split the profit based on how much they contributed. If John paid in 75% of the money, he would claim 75% of the profits on his tax return.
    lawanwadee's Avatar
    lawanwadee Posts: 3,653, Reputation: 124
    Immigration Expert

    Mar 24, 2011, 03:45 PM

    Thank you very much...

    This is not homework... it's a true story. The real problem is John did not file tax return in 2007-2008. At that time they lived together but not legally married. John was retired and disabled. Mary filed her tax return as single.

    They got married in 2009, and John passed away two months later. There was no will, no estate, and now IRS is after John's 2007 & 2008 income tax.

    This joint account was opened in 2007, with consolidated income in 2008 and 2009. All investment belong to John. He put Mary's name on the account just because it's easy to have her go to the bank, take care of wire transfer, etc. as he was unable to walk.
    ebaines's Avatar
    ebaines Posts: 12,132, Reputation: 1307

    Mar 25, 2011, 06:28 AM

    If John failed to pay taxes due on capital gains he made in 2007 and 2008, the executor of his estate (who I would assume is Mary) is responsible for filing those returns and paying any taxes owed out of the proceeds of his estate. To be clear - Mary is NOT responsible for paying these past-due taxes out of her own assets, but IS responsible for paying them out of John's assets. But she is going to have to convince the IRS that she funded none of the old brokerage account, and to do that she should look through his old records and see if she can reconstruct exactly where John got the money to fund the account. If she can find a cancelled check or records of a transfer from a different acccount of John's to this one that would be great.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,784, Reputation: 846
    Senior Tax Expert

    Mar 25, 2011, 09:32 AM
    ebaines raises good points, but the FIRST course of action should be for the estate to file the 2007 and 2008 tax returns.

    Stock sales proceeds do NOT equate to the actual taxable capital gain, and given how the stock market ran in 2007 and 2008, I would be willing to bet that there was a sizable capital LOSS in at least one of the two calendar years, so there is a better than even chance that NO taxes are due on either tax return.

    If you need professional help filing these returns, email me at or
    lawanwadee's Avatar
    lawanwadee Posts: 3,653, Reputation: 124
    Immigration Expert

    Apr 14, 2011, 09:09 PM

    Thank you so much ebaines and AtlantaTaxExpert. I truly appreciate your help, so does Mary.

    There are more to this story... but for now she has to file 2009 return and could not afford professional help. Mary is an immigrant, she was a victim of domestic abuse. She was rescued by John and he helped her with immigration issue. This is how I met them years ago.

    Thanks again...
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,784, Reputation: 846
    Senior Tax Expert

    Apr 15, 2011, 09:54 AM
    Glad to help!

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