Question

Shares are purchased in a custodial 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

Answer:

B. minor

Explanation:

The tax liablity in the custodian account is the responsiblity of minor. The custodial account has a social security number of minor, therefore, all the income earned are reported to IRS team, which show tax is due on all income earned every year. IRS does not wait until minor reach the age of 18 to collect tax, however, they collect it from their parents.