Question

Shares are purchased in a custodian account, and are later sold at a profit. Tax liability rests with the:

A. custodian
B. minor
C. minor at the age of majority
D. custodian at the age of majority

Answer 1

The correct answer is letter "B": minor.

Step-by-step explanation:

When a trading account is opened the information of the account holder is registered. Even if the primary in the account is a minor, his or her Social Security Number (SSN) is registered. Then, all liabilities fall in the minor even if legally the under-age cannot place or exit from trades. Then taxes are reported every year but through a custodian who is the person in charge of managing the account at the convenience of the minor until he or she becomes an adult.