3

In 2008, my father-in-law let us know about a UGMA account that was for my wife. We gladly took control of the assets and noticed the value of the account crashed at some point. At the end of 2008, I received a statement with the following verbiage:

Realized Gain/Loss from Sales
Short-term loss -$xxx.xx
Long-term loss  -$yyy.yy
....

The Long-term loss was thousands of dollars. Only until recently did I understand that the UGMA account was ours before we knew about it. Can I somehow deduct these losses from my 2008 taxes and re-file? If so, how and about how much (percentage-wise) would we get back?

2

Yes, you can refile your 2008 income taxes using form 1040X. If you've already done your 2009 taxes, you may want/need to refile them, too, depending on whether or not you've got a capital loss carryforward.

It's tough to say what the bottom-line dollar result will be for you without taking into account the other items on the return.

2

You have three years from the due date of the original return. i.e. Your 2007 return, due 4/15/08 can be refiled until the 2010 return is due on 4/15/11.

Yes, realized losses are deductible. They offset other gains, or up to $3000 of ordinary income.

1

All references I can find to UGMA/UTMA state that the account is the property of the beneficiary (your wife), and should be reported on the beneficiaries taxes. As such, you should be able to follow IRS guidance for any normal investment account (unless she was is a student under the age of 24 in the past few years).

In the case of unreported loss in prior years, I'm seeing anecdotal evidence that unreported capital losses carry forward indefinitely, but you should do more research on unreported capital losses. You may be required to offset losses against taxes due on capital gains above $900 in prior years as well.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.