Dependent Parents Capital Loss Claim

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Subject Author Date Dependent Parents Capital Loss Claim saurinmehta 09-28-2009  Re: Dependent Parents Capital Loss Claim Tom Russ 09-28-2009  Re: Dependent Parents Capital Loss Claim D. Stussy 09-29-2009  Re: Dependent Parents Capital Loss Claim Alan 09-29-2009
Posted by saurinmehta on September 28, 2009, 7:57 pm Please log in for more thread options My parents does not have any income. My spouse and I have been claiming them as dependent for few years now in our joint return. Last year in 2008, I invested my money in my parents brokerage account and made a overall loss of $5,400. I deposited my money on their account to do investment. My question is: 1) Can I claim my dependent parents under my return, if not do they have to file tax return 2) Who can claim capital loss a) If I claim them as dependent can I claim that loss and have deduction in my tax b) If they have to file their return how can they claim loss deduction if they don't have any income c) any other option Thanks for help in advance Mehta ------------------------------------- ##-----------------------------------------------## Newsgroup Access Courtesy http://www.rockryno.com/ Tax and Accounting Software Forums Web and RSS access to your favorite newsgroup - misc.taxes.moderated - 23095 messages and counting! ##-----------------------------------------------## . -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Tom Russ on September 28, 2009, 9:14 pm Please log in for more thread options Bearing in mind that I have no particular expertise in tax matters, here is my take on your questions: On Sep 28, 4:57 pm, saumin1_at_yahoo_dot_...@foo.com (saurinmehta) wrote: > My parents does not have any income. My spouse and I have been claiming > them as dependent for few years now in our joint return. Last year in > 2008, I invested my money in my parents brokerage account and made a > overall loss of $5,400. I deposited my money on their account to do > investment. When you invested "your" money in your parents brokerage account, I would think that it then became a gift to your parents, and it effectively became "their" money. I am curious as to why you chose to do the investment in their account rather than your own. Did you intend to give them the money? > My question is: > 1) Can I claim my dependent parents under my return, if not do they have > to file tax return You will be able to claim your parents as dependents as long as they meet the requirements. There are support and income tests to this, but I don't recall the precise numbers for income. That doesn't seem to be relevant at the moment, since you state your parents don't have any income. > 2) Who can claim capital loss If the money is in their account, with their tax ID number, then it is their money and their loss. So only they can claim the loss. > a) If I claim them as dependent can I claim that loss and have deduction > in my tax No. It appears that the loss belongs to your parents since it comes from their investment account. > b) If they have to file their return how can they claim loss deduction if > they don't have any income They will have to fill out a schedule D and with no offsetting income (this year), they will be able to carry forward the loss to future years where it can offset capital gains and up to $3,000 per year of other income. > c) any other option Not that I am aware of. The loss belongs to your parents and not to you, so they are the ones who get to claim it. Now, some of this may change depending on specific details of the arrangement of the investment account. But that would require a lot more information than we have available here. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by D. Stussy on September 29, 2009, 10:02 am Please log in for more thread options > My parents does not have any income. My spouse and I have been claiming > them as dependent for few years now in our joint return. Last year in > 2008, I invested my money in my parents brokerage account and made a > overall loss of $5,400. I deposited my money on their account to do > investment. > > My question is: > > 1) Can I claim my dependent parents under my return, if not do they have > to file tax return It is possible as long as they don't file jointly. There are 3 other tests that have to be met also (you already meet the relationship test). > 2) Who can claim capital loss It was THEIR account. You gifted them the money and they lost it. > a) If I claim them as dependent can I claim that loss and have deduction > in my tax No. > b) If they have to file their return how can they claim loss deduction if > they don't have any income $3,000.00 > c) any other option No. > Thanks for help in advance -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on September 29, 2009, 11:36 am Please log in for more thread options saurinmehta wrote: > My parents does not have any income. My spouse and I have been claiming > them as dependent for few years now in our joint return. Last year in > 2008, I invested my money in my parents brokerage account and made a > overall loss of $5,400. I deposited my money on their account to do > investment. > > My question is: > > 1) Can I claim my dependent parents under my return, if not do they have > to file tax return > 2) Who can claim capital loss > a) If I claim them as dependent can I claim that loss and have deduction > in my tax > b) If they have to file their return how can they claim loss deduction if > they don't have any income > c) any other option > > Thanks for help in advance > > Mehta > > ------------------------------------- > > > > > ##-----------------------------------------------## > Newsgroup Access Courtesy http://www.rockryno.com/ > Tax and Accounting Software Forums > Web and RSS access to your favorite newsgroup - > misc.taxes.moderated - 23095 messages and counting! > ##-----------------------------------------------## > . > Let me tell you what this "sounds" like, as I have seen it often in the past. (This is not to say, that what follows was your intent.) A taxpayer has a close relative that has little to no income and pays no taxes. The taxpayer to evade paying tax at his/her own rate, uses an account in the relative's name to make investments that throw off income (interest, dividends, capital gains) which is then taxed at a lower rate or even not taxed. The gains are then given to the taxpayer who is managing the account. This use to be done with children before the IRS over time tightened the rules as to how children's income gets taxed. The reason I said it "sounds' like the above is that you said you invested your money in their account. You didn't say, that you made them a gift and then managed their account. So let me ask you this: What was your intent if the account had income? Where did you intend to report that income? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Parents Dependent Capital Loss Claim October 8, 2009, 8:52 pm How to Claim Capital Loss from Debtor Chapter 11 Bankruptcy March 23, 2008, 9:38 pm dumb question: Can I claim dependent's capital loss or gain? March 20, 2007, 1:38 am Children May Now be Treated As Dependent of BOTH Parents. 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