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Subject Author Date
changed UTMA to 529 - tax liability? msabatini2001 02-05-2008
Posted by msabatini2001 on February 5, 2008, 1:33 pm
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 I had a UTMA in my daughter's name. Last year I closed this account
and transfered the assets into a 529 account. The mutual fund sent me
a 1099-R with the proceeds.
Is there a tax consequence because of this? All the proceeds were used
to open the 529 account, so is there still a tax liability due?

Where on the Federal tax form do I declare this? Or is this another
form?
Thanks.
Mark Sabatini

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Posted by eagent on February 5, 2008, 1:44 pm
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 On Feb 5, 1:33 pm, msabatini2...@yahoo.com wrote:
> I had a UTMA in my daughter's name. Last year I closed this account
> and transfered the assets into a 529 account. The mutual fund sent me
> a 1099-R with the proceeds.
> Is there a tax consequence because of this? All the proceeds were used
> to open the 529 account, so is there still a tax liability due?
>
> Where on the Federal tax form do I declare this? Or is this another
> form?
> Thanks.
> Mark Sabatini
>
> --
> << ------------------------------------------------------- >>
> << 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 atwww.asktax.org.                 >>
> <<         Copyright (2007) - All rights reserved.         >>
> << ------------------------------------------------------- >>

25+ years in this business I've never heard of a 1099-R being issued
in regards to an UTMA account. Are you SURE about it being a 1099-R?
The R stands for RETIREMENT.

Gene E. Utterback, EA, RFC, ABA

--
<< ------------------------------------------------------- >>
<< 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 Phil Marti on February 6, 2008, 9:35 am
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>I had a UTMA in my daughter's name. Last year I closed this account
> and transfered the assets into a 529 account. The mutual fund sent me
> a 1099-R with the proceeds.
> Is there a tax consequence because of this?

I suspect it's a 1099-B, not a 1099-R. Yes, there's a tax consequence even
though the proceeds went into a 529.

Your daughter must file a return, reporting the sale on Schedule D. In
calculating the tax she must take into account the "kiddie tax" provisions.

See the 1040 instructions.
--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< 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 joetaxpayer on February 6, 2008, 9:52 am
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Phil Marti wrote:
>
>
>>I had a UTMA in my daughter's name. Last year I closed this account
>>and transfered the assets into a 529 account. The mutual fund sent me
>>a 1099-R with the proceeds.
>>Is there a tax consequence because of this?
>
>
> I suspect it's a 1099-B, not a 1099-R. Yes, there's a tax consequence even
> though the proceeds went into a 529.
>
> Your daughter must file a return, reporting the sale on Schedule D. In
> calculating the tax she must take into account the "kiddie tax" provisions.

Is this legal? If the OP is the owner of the 529, with the right to
change the beneficiary, didn't he just take money (the UTMA money) away
from its legal owner, even though she is a minor?
JOE

--
<< ------------------------------------------------------- >>
<< 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 Phil Marti on February 6, 2008, 11:30 am
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"joetaxpayer" wrote:

> Is this legal? If the OP is the owner of the 529, with the right to change
> the beneficiary, didn't he just take money (the UTMA money) away from its
> legal owner, even though she is a minor?

Beats me. Legal or not, it's gross income to her.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>

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