Joe, I have a situation where the grandmother is the custodian of a UTMA/529. It has been determined that the minor (age 19 in NJ) will not attend college. The grandmother requested a full distribution of the UTMA/529; a non-qualified distribution. On who's tax return does the taxable distribution plus penalty get reported (grandmother or minor beneficiary)? Minor is currently being claimed as a dependent on the minor's parents' tax return.