Joint Account vs. Family Partnership
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Joint Account vs. Family Partnership Marilyn recently wrote...
My two sons, my significant
other, and I would like to begin to invest in stocks together through
B&H. My question, is it possible for the four of us to have a joint
account, or do we need to go through becoming an official investment club to do
this?
If you establish a joint account using your
Social Security Number you will be responsible to report all of the profits,
losses, dividends, interest, expenses, etc. realized from this venture on your
tax return.
On the other hand, if you establish a club
(partnership), the club itself will have a EIN similar to a Social
Security Number. All taxable items will then pass through the club to the
members in proportion to their percentage ownership in the club. If
a partnership, the club itself pays no tax. Each individual pays
taxes on their share of the club profits at their individual tax
rate
Therefore, depending on the ages and tax brackets
of you, your significant other, and your sons, it may or may not be worth
going to the trouble of establishing a partnership. For more information
on partnerships in general and specifically on family partnerships you might
wish to consult IRS Publication #541. You can download this
publication from the IRS web site or from bivio at http://www.bivio.com/trez_talk/files/IRS-Publications
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