Your Tax Questions Answered
Kiddie Tax Loss
Kiplinger editorial director Kevin McCormally and fellow tax experts Peter Blank and Mary Beth Franklin tackle your most pressing tax challenges.
April 2, 2009
QUESTION: We sold shares of our kids stocks kept in an custodial account and incurred a long term capital gain loss in 2008. The kids are under 19 years old. They have no other income to offset the loss. Can we claim their capital gain loss in the parents 2008 tax return? --K.L.
KEVIN ANSWERS: Sorry, but no.
Just as gains inside the custodial account belongs to your children, so does the loss. It has to go on their returns. Now, if they don't have to file, or if the loss doesn't save them any money, they can carry over any unused loss for future years. This is tricky for kids, so study the instructions for Schedule D carefully. http://www.irs.gov/pub/irs-pdf/i1040sd.pdf
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