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winktax
winktax, Enrolled Agent
Category: Tax
Satisfied Customers: 425
Experience:  18 years experience as an Enrolled Agent, insurance agent, stock broker and financial advisor.
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Hi, I have a question regarding tax for a brokerage account,

Resolved Question:

Hi, my mother, who is a non-US citizen, moved all of her stock (from her US based Merrill Lynch account) to my account (under my name) with E-Trade, it happened last year. I am a US citizen, and have had an E-Trade account for a while. So in a way, I am managing her account. Now, the shares under this stock will be sold entirely. The question is, since this is a transfer from her account to my account, when all shares are sold, will it look like I made X amount of money (because of the transfer), which in the IRS eye, it is taxable, and I will be liable for it? The plan is to sell all of the shares and buy other stock's shares immediately. And get this, there is a capital loss on this stock, that is why all shares need to be sold before the stock price goes lower.  Please help.
Submitted: 2 years ago.
Category: Tax
Expert:  winktax replied 2 years ago.

winktax :

Since the stock account assets have been transferred into your name, your E-trade account, your mother has in practice made a gift of these assets to you. Therefore in the eye's of the IRS the stock account assets are yours, are reported as being owned and sold by you, and you are responsible for reporting any related transactions on your tax return, (interest, dividends, sales).

winktax :

Your basis in the assets is your mothers basis (basis = cost = purchase price). If the stock in question is sold for a capital loss you should report that loss on your tax return. Schedule D and Form 8949.

winktax :

The actual transfer of assets is considered a gift, a person who receives a gift is not responsible for any taxes on the gift, however the person giving the gift may be responsible to file a Gift Tax return, Form 709. In general a person may gift up to $13,000 per year, per person away and not have to file a gift tax return. There are overall limits for lifetime gifts and the limits are different for Non US citizens.

winktax :

I hope this answers your question, if not, please provide more details so that I can provide a more specific answer. If I have answered your question, please click the accept button.

winktax :

Thank You.

Customer:

Hi Winktax,

Customer:

Hi Winktax, thank you, XXXXX XXXXX quite a relief for me. So, let's say the stock transfer was $40K, and there was a $15K capital loss on this stock. I would be able to claim the capital loss of $15K and wouldn't get taxed for the $40K, correct? If later on I buy shares of another stock, then the price goes up, then decide to sell, I will be taxed on the capital gain of that stock, correct?

Customer:

Thank you!

Customer:

I forgot to ask, do you know what the gift limit for non-US citizens to US citizens? The transfer was more than $13K. What are the chances the IRS asking for more information for this gift/transfer?

winktax : Yes you would be able to claim the capital loss of 15k, subject to capital loss rules. the stock transfer is not subject to any gift/income tax. If the new stock price goes up and you sell, then you would pay capital gain tax on that sale.
winktax : A noncitizen spouse can transfer up to $136,000 per year, While yours is not a noncitizen spouse, we can use the $136,000 figure as a good indicator that no gift tax issues are present for this asset transfer.
Customer:

Thank you very much Winktax! You made my day :)

Customer:

Do you own a tax practice or know someone you can refer to me in SF, CA? I am self-employed, started last year. My fiance and I created an LLC. We will definitely have some tax questions. Again, thank you very much!

winktax : Personally I am an Enrolled Agent, a person licensed by the IRS represent taxpayers before the IRS. So I would recommend finding a local EA. We specialize in taxes, vs CPA which specialize in public accounting. The National Assoc Of Enrolled Agents has a Find an EA on their web site, use this to find someone local to you. http://www.naea.org/
winktax :

I hope this answers your question, if not, please provide more details so that I can provide a more specific answer. If I have answered your question, please click the accept button. Thank You.

winktax, Enrolled Agent
Category: Tax
Satisfied Customers: 425
Experience: 18 years experience as an Enrolled Agent, insurance agent, stock broker and financial advisor.
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winktax
winktax
Tax Professional
425 Satisfied Customers
18 years experience as an Enrolled Agent, insurance agent, stock broker and financial advisor.