Conference nyoss1::market_investing

>   I talked to my accountant but was not satisfied with his answers ...

      If  you're  paying a professional accountant for information he/she
      has a legal an ethical obligation to either
          
          o give you the correct answer, or
          
          o admit that he/she does not know.
      
      Answers  in  this notes file have NO such guarantee.  Some will be
      out-right wrong; some will be correct and insightful.  
      
      The point of this is that if you don't trust your accountant, then
      it might be a better idea to seek a  new  accountant  rather  than
      asking advice from this conference.

  I know fully well what I can expect from this notesfile, legal implications
  and all. What I want to know is if any one else went through this process
  with custodial accounts and what it involved.

  If we were to take the "professional advice" thing serious enough we may
  have to shut this notesfile down since there are professional money
  managers who have legal obligations on the advice they give. 

  Guess the mood is not so good over there at ZKO.  :^)

  Nari

Taxwise, a custodial account is generally no different than any other account,
other than the fact that any income or loss must be reported on a tax return
for your child (assuming your child has enough income to have to file a tax
return).  If you are selling a mutual fund, there will be a capital gain or
loss that should be reported on Schedule D just like on yours.

The only thing odd about a custodial account is that the funds taken out cannot
be transferred back into a non-custodial account (or a different child's
account for that matter) or spent on anything except things the government
accepts as expenses incurred by the child.  I don't know the exact criteria and
I don't know what government agency (if any!) enforces these restrictions.

Did your accountant say something else??

>>>
The only thing odd about a custodial account is that the funds taken out cannot
be transferred back into a non-custodial account (or a different child's
account for that matter) or spent on anything except things the government
accepts as expenses incurred by the child.
>>>

The accountant told me that custodial accounts could be withdrawn at any time.
I thought there was something wrong with this picture since IRS had
waived taxes on it since it was custodial and somewhere they would usually
jump in with back-taxes and penalties.

The tax-return implications were pretty clear. I think there was a 500$ upper
limit to interest and capital gains. Anything above that would be taxed at
the parents' rate.

Seems like the big IRS tomes are the place for all answers.

Thanks
Nari

    Would anyone happen to know how much earned income (minimum) would
    require filling out a tax return.
    
    We have a new custodial account for our son which had very little
    income last tax year and I was wondering if I have to report it via a
    tax return.
    
    Marie