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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 789
Experience:  Years of Experience in Business & Personal Taxes
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My Wife and I started mutual funds for our Sons years ago.

Resolved Question:

My Wife and I started mutual funds for our Sons years ago. Our oldest Son (26 yr old) cashed his fund out this year and re-invested it with Scott-Trade. He received a Form 1099-B. How is this handled on his return? Is the amount in Box 2, additional income? What about the Capital Loss in Box 4?
Submitted: 5 years ago.
Category: Tax
Expert:  DanielleCPA replied 5 years ago.

Sales of stocks, mutual funds, and other investments are reported on Schedule D. Since you state that he has held them for greater than one year, the information from the 1099-B would be reported in Part II of the form, long-term capital gains and losses.

 

The amount in Box 2 represents the sales price of your son's mutual fund. It does not represent additional income per se, but does need to be reported on his tax return. This amount is reported in Box 8d of Schedule D. The cost basis of the mutual fund is reported on line 8e (this should be in Box 3 of the 1099-B). The only amount that is taxable (or deductible in the case of a loss) is the difference between the selling price and the cost basis.

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