Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
Mistakenly included UTMA loss in year 2014
Posted by: luaz, March 31, 2017 02:50AM

In Yr 2014 there was a (10k) capital loss from sale of stocks in an UTMA account. There is no other income from the minor or the UTMA account. Mistakenly, I included the (10K) capital loss in our joint tax return.

I didn't file form 8814 for yr2014 because I didn't know about the special filing requirement for UTMA account.

We did paid tax in the yr 2014 joint tax return. We had so much capital loss (more than 50k) that year, so the majority of the loss was carried over to future years.

The question is how should we make the correction?

(1) Do we file an Amended join tax return for yr 2014 so the cap loss carry over amount is corrected (by removing the (10K) capital loss from UTMA account?

(2) Does that mean Amendment tax return need to be filed for year 2015 & 2016 as well?

(3) Shall I file a year 2014 tax return for the minor UTMA account so the capital loss is carried over in future year? The minor has no income, no interest/div income. Is it worth the effort?

(4) Shall I finish the 2016 tax return and then later submit Amendments for 3 yrs (2014, 2015, 2016) to correct the capital loss carry over amount?

Thank you for your time.

Re: Mistakenly included UTMA loss in year 2014
Posted by: Art, March 31, 2017 09:50PM
1. I would not bother amending, since no numbers on the 1040 change, but prepare a corrected 1040 including corrected 8949 and schedule D for your records.

2. See above -- if you really want to file an amended for each year, do so. The minor's 1040 and schedule D should be filed each year now so long as there is capital loss carrry forward.

3. The first amended kiddie tax form and Sch D establishes the loss,and that loss carries forward until used up. File.


4. Sounds like a plan to me.

Re: Mistakenly included UTMA loss in year 2014
Posted by: Drewremedy, April 1, 2017 05:07PM
Well, absent fraud, if you make a mistake and then within 3 years IRS does not challenge it, the door closes.

Re: Mistakenly included UTMA loss in year 2014
Posted by: luaz, April 1, 2017 08:00PM
Thank you for the reply!

I forgot to ask...

Do I need to amend the state tax returns (AZ) for 2014,2015,2016?

Re: Mistakenly included UTMA loss in year 2014
Posted by: luaz, April 6, 2017 01:35AM
Regarding minor's tax return (for the UTMA stock transactions). I understand that it's a good idea to file a federal tax return to carry forward the unused capital loss. Do I need to go back and file the state tax returns (2014, 2015, 2016) for the minor? Thanks again for your time!

Re: Mistakenly included UTMA loss in year 2014
Posted by: Art, April 6, 2017 07:40PM
If this change does not affect the state, why bother?



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