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Hi again ...
The way the IRS will see this is that you gifted your son 25,000 (which, as I said before, WILL require that you file a gift tax return, because the amount is over the $14,000 annual exclusion on gift taxes) BUT it's nowhere near the five million, plus, lifetime exclusion
If he opened the account in his name and social security number, the brokerage frim will publish a 1099 for any dividends or interest ... and if there's been no sale yet that's it ... but any 1099 upon sale or dividends or interest will be sent to your sone (along with the copy to IRS)
So, again, if he has not yet SOLD the stock and if there have been no dividends or interest .... his 1099 for the account will show nothing
Now, if the EXPECTATION was that you expected that he give you the account then what you have here, once the account is transferred back to you is a capital gain (on your part) But until you take some action here (Again IRS will determine how it is treated based on the facts and circumstances, i.e., you expected to receive the stock back from your so, which would be a capital gain for you)
No taxable event has happened .. (to finish that thought) Your son simply has an account with 250,000 of stock ... once money changes hands (he sells it and keeps it ... or he gives it back to you because that was the expectation - thereby making this a transaction, an exchange, rather than a gift)) THEN there will be a taxable event ... in these two scenarios a gapital gains for him (if he sells) ... or a capital gains for you ( if her returns it because that was the expectation)
If you do nothing, and do not want the money back, and are willing to characterize this as a gift you essentially have a non-event (other than technically needing to completel a gift tax form, IRS form 709, documenting the gift
Still with me?
The IRS gives a long list of events that will be considered for reasonable cause. They are:
The Internal Revenue Manual goes on to say that any reason will be accepted as reasonable cause if it can be shown that the taxpayer exercised ordinary business care and prudence and, despite that, was still not able to comply with their tax obligations.
Sorry, that was on my clipboard from pasting it in for another client ,,, But it COULD apply here
WHat needs to happen HERE is that you need to determine what you intent was ... if it was to give the money with no expectation of anything it was a gift
IF it was done so that your son could BUY the stock FOR YOU, then you need to have the account put back in your name
Because once the stock is sold you WILL have a taxable event
I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
PLease, again, if you'd like to provide more detail or drill down on this some more, or ask additional questions let me knowlet me know
Just checking back in HERE, as I never saw you come back into the chat
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But again, let me know if you have more questions