[taxhelpplease]

My friend and I opened a joint brokerage account. We made each transaction together and now are trying to figure out how to report our losses. I am single and he is married - when I filed my tax return do I simply report half of the losses and he reports the other half?

Thanks in advance for the help!

[ebaines]

You must report income amounts that are identical to what the 1099's from the brokerage report to you. Depending on how the account was set up, it's likely that the person whose social security number is listed first on the account will receive 1099's that report the full amount of interest, dividends, and gains/losses, for the account and the other person will receive no 1099's at all. Consequently either (a) the first person goes ahead and reports all the income, and pays taxes on it , or (b) the first person reports that he received a portion of the income as a nominee for the 2nd person.

In case (b) the first person must issue a 1099-B, 1099-INT, and/or 1099-DIV as appropriate to the second person (with a copy to the IRS by Feb 28). Then for reporting interest, dividends, or capital gain distributins from mutual funds on his own taxes the first person reports the full amount of income (in agreement with the 1099 he received) and adds a second line as a subtraction for the amount assigned to the second person, with the notation "nominee distribution." For capital gains and losses from sales: new for 2011 is Form 8949 for reporting capital gains - the nominee reports the sale using the figures from the 1099-B as sent by the brokerage, but indicates code "N" in column (b) and in column (g) shows a negative correction for gains or a positive correction for losses.

For more info see the example on page 19 of IRS Pub 550: http://www.google.com/url?sa=t&rct=j...xOu5Pbc5N7woRA