May 4, 2018

Who reports capital gains if a stock is owned jointly?

Capital gains can be confusing, due to the way they’re taxed, and if they are a shared asset, e.g. owned jointly by spouses. First, it’s important to determine your capital gains by subtracting the Adjusted Cost Base minus your outlays and expenses from the Proceeds of Disposition. The resulting positive number is a capital gain. However, only half of your capital gains are taxed, and you can also offset those gains with any losses you had in previous years. Second, determine the true owner of the asset in the partnership. For instance, if you put in 50 percent and your partner also contributed 50 percent, then it is fair to claim 50 percent of the capital gains.

Key Takeaways:

  • Half of that gain is taxable; and added to your other income for the year to be subject to your marginal tax rate.
  • Capital losses can be carried forward throughout your entire lifetime to offset capital gains in your future. They can also offset capital gains of the immediately preceding three years in any order.
  • Who reports the income depends on who provided the capital or how much each contributed to the purchase of the stocks.

“When you invest together, you get taxed together.”

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