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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29485
Experience:  Taxes, Immigration, Labor Relations
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Maybe, I liquidated a utma account daughter in 2013. There

Customer Question

maybe, I liquidated a utma account for my daughter in 2013. There was a long term loss on the account but now the IRS is saying the net is taxable to my daughter, is this possible ?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

The distribution will be reported as taxable for your daughter - because that is HER account - not yours.
You are the custodial for that account - but not the owner.
So for that distribution - a reporting form will be issued in your daughter's name and her SSN.
And your daughter might be required to file the tax return depending what exactly is reported.
If she realizes a loss - that would be calculated on her tax return - and there would not be any tax liability while reporting might be needed.

However if your daughter would not report that transaction - the IRS might not know whether your daughter a gain or loss - and might think she has a gain...
So that might be a matter of reporting not a matter of having tax liability.