When my son was born, my in-laws gave my son $5000 worth of AT&T stock. Over the years there have been many spinoffs, etc. In 2005, I sold some of the stock which was a spinoff, Comcast, $5000 worth. Since it was a spinoff, I have essentially all profit and no cost. I intend to report this income on my son's tax return, not my tax return. Is it a straight deduction if the money is being used for college tuition, or are there some things I need to be careful of.
That's not true. It being a spin-off does NOT intrinsically make it "all profit and no cost". You need to get from ATT a copy of their spinoff worksheet so you can determine how much of the original basis flowed through to Comcast.
It's not a matter of intent -- you simply have no choice. The transactions MUST be reported on your son's return. You can NEVER report a child's stock sales on your own return.
-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us
When there is a spinoff, you have to allocate the basis between the 2 companies. So, you do have basis in the spinoff stock sold. The co website may have info on how much to allocate to each spinoff. ___________________________________
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