Nominee Distribution

AAA

DEFINITION of 'Nominee Distribution'

Interest income reported on IRS Form 1099-INT that a taxpayer designates as being the interest income of a different individual. A taxpayer may choose to make a nominee distribution if s/he jointly owns an account with someone who is not his/her spouse and the financial institution where the account is located reports all the interest earned on that account as being earned by only one of the account holders.

INVESTOPEDIA EXPLAINS 'Nominee Distribution'

The taxpayer who received the 1099-INT from the financial institution uses Schedule B, Interest and Ordinary Dividends, to report the entire amount. Below that the taxpayer writes "nominee distribution" and enters the amount of interest that really belongs to the other account holder. By subtracting the nominee distribution, the taxpayer avoids paying tax on interest income that isn't really his/hers. The rightful owner pays the tax instead.

RELATED TERMS
  1. Individual Tax Return

    The type of tax return filed by an individual. Both single and ...
  2. Form 1099-INT

    The form issued by all payers of interest income to investors ...
  3. Interest

    1. The charge for the privilege of borrowing money, typically ...
  4. Nominee Interest

    An interest payment that a person receives on behalf of someone ...
  5. 1040A Form

    A simplified version of the 1040 form for individual income tax. ...
  6. Buffett Rule

    A tax rule proposed in 2011, by President Barack Obama, stating ...
Related Articles
  1. Forces Behind Interest Rates
    Economics

    Forces Behind Interest Rates

  2. Reporting Your Interest Income
    Taxes

    Reporting Your Interest Income

  3. What Investors Should Know About Interest ...
    Investing Basics

    What Investors Should Know About Interest ...

  4. Using Life Insurance To Make Charitable ...
    Home & Auto

    Using Life Insurance To Make Charitable ...

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center