My son is custodian for his son's UGMA account. His son (my grandson) turns 18 this month. Later this summer we would like to use some of this money (it is in a Mutual Fund) for school expenses which come due in late August. Question: Sale of part of this fund will involve a capital gain/loss situation. On whose tax return should the capital gain/loss be accounted for: The custodian's (my son) or my grandson's? Although 18, the account has not yet been turned over to him; he otherwise has a small income from miscellaneous work during the school year.
The UGMA assets belong to the grandson, so his tax return will account for the gain. He will most likely need his own tax return done, but it will be affected by his parents' retun (due to the kiddie tax).
