One thing to consider is the timing of when your son plans to sell these investments. Since he'll inherit your cost basis (what you originally paid ~14 years ago), he'll owe capital gains tax on the full appreciation when he sells. Given that the investments have grown from $9,000 to $105,000, that's potentially significant capital gains tax. If he's planning to hold these investments long-term anyway, the gift approach works well. But if he wants to liquidate soon after receiving them, you might want to factor in the tax impact on his side. Sometimes it makes sense to sell some positions while they're still in your names (especially if you're in a lower tax bracket) and gift the cash proceeds instead, depending on your respective tax situations. Also, make sure your brokerage can handle the transfer properly with correct basis reporting. Some brokers are better than others at tracking gifted securities and providing the right tax documents.

You're dealing with a common but tricky situation. The good news is that gifting stocks directly to your son won't trigger capital gains for you - it's not considered a taxable event for the giver. However, your son will inherit your original cost basis (around $9,000), so he'll owe capital gains tax on the full $96,000 appreciation when he eventually sells. Given the $105,000 value, you have two main paths: 1) **Spread it over 3 years**: Gift $38,000 worth of shares annually (you and your wife each using your $19,000 annual exclusion). This avoids any gift tax paperwork entirely. 2) **Transfer everything at once**: You'd need to file Form 709 for the amount over $38,000, but likely wouldn't owe actual gift tax unless you've already used up significant portions of your lifetime exemption ($13.99 million per person in 2025). Before deciding, definitely check what tax bracket your son is in for capital gains. If he's in a higher bracket than you are, it might actually be more tax-efficient to sell some of the most appreciated positions while they're still in your names, then gift the proceeds. This strategy works especially well if you're in the 0% or 15% long-term capital gains bracket. Also, make sure your brokerage can properly document the gift with correct basis reporting for future tax filings.

Your situation is actually pretty common, and the answer is clear - if you're married and filing a joint return with your spouse, you cannot be claimed as a dependent on your mom's tax return. The IRS Joint Return Test specifically prevents this, regardless of who paid for your education expenses. However, there's an important point about your spouse's documentation that others have mentioned. If your spouse doesn't have an SSN yet, you'll need to get an ITIN (Individual Taxpayer Identification Number) to file jointly. This requires submitting Form W-7 with your tax return, and the process can take 7-11 weeks. Given the timing, you might want to file an extension to avoid missing the deadline. As for your mom, she may still be able to claim education credits for the tuition she paid directly to your school, even without claiming you as a dependent. The Lifetime Learning Credit or American Opportunity Tax Credit might be available to her if she meets the income requirements. This could be a good compromise - she gets some tax benefit for helping with your education, but you still file correctly with your spouse. I'd suggest having a calm conversation with your mom explaining that this isn't about choosing sides, but about following tax law correctly. Her accountant should understand these rules, and if they don't, that's concerning.

I went through this exact same situation two years ago when I got married! My dad was insisting his accountant could claim me as a dependent even though I was married filing jointly, and it caused a huge family argument. The bottom line is that the IRS rules are very clear on this - if you're married and filing a joint return, you cannot be claimed as a dependent by anyone else. Period. The Joint Return Test is one of the qualifying tests for dependency, and filing jointly automatically disqualifies you. What helped resolve things with my family was explaining that this wasn't about me choosing not to help them with taxes - it's literally against federal tax law. Your mom's accountant should absolutely know this rule, and if they don't, that's a red flag about their competence. The good news is that your mom can still benefit from paying your tuition! She can likely claim education credits directly (like the American Opportunity Tax Credit or Lifetime Learning Credit) for expenses she paid to your school, even without claiming you as a dependent. This might actually be better for her tax-wise anyway. I'd suggest sitting down with your mom and maybe even offering to help her find a more knowledgeable tax preparer if her current accountant is giving incorrect advice about such a basic dependency rule.

Great thread! I went through this same process last year when I incorporated my app business in Ontario. One thing that really helped me was keeping detailed records of exactly what types of transactions I was processing through the App Store - Apple's revenue reports can be quite detailed if you dig into them. For the W-8BEN-E form, I found Part II (disregarded entity or branch receiving the payment) was often left blank for simple Canadian corporations, but make sure you understand whether this applies to your situation. Also, don't forget that once you file the W-8BEN-E, it's generally valid for three years unless your circumstances change significantly. One gotcha I ran into: if you ever take on US investors or partners, you'll need to update your beneficial ownership information and potentially refile. The form is tied to your ownership structure, not just your corporate registration location. For anyone still struggling with the classification between business profits vs royalties, I'd recommend documenting your decision-making process. The CRA and IRS generally want to see that you've made a reasonable, consistent interpretation of the treaty provisions.

This is such a helpful thread! I'm in the early stages of incorporating my app business in Alberta and this W-8BEN-E stuff has been keeping me up at night. One question I haven't seen addressed - does the timing of when you file the W-8BEN-E with Apple matter? I'm still operating as a sole proprietor right now but plan to incorporate next month. Should I wait until after incorporation to file the corporate form, or can I file it in advance? Also, for those who've been through this - how long does it typically take Apple to process the form and start applying the correct withholding rates? I want to make sure I time this right so I don't end up with messy tax situations spanning across my transition from individual to corporate status. The breakdown of business profits vs royalties that @Sophia Gabriel provided is super valuable - I had no idea there were different rates for different types of app revenue streams!

Hey, one thing nobody mentioned - the type of entity matters a lot here. Is this an LLC taxed as a partnership, an S-Corp, or something else? The K-1 looks different depending on the entity type and the tax treatment varies.

As someone who went through this exact situation last year, I can tell you that understanding the difference between distributions and taxable income is crucial. You mentioned receiving both cash and a K-1 - this is totally normal for partnership equity holders. One thing I wish I'd known earlier: keep detailed records of ALL your distributions and the corresponding K-1s each year. The IRS expects you to track your basis over time, and if you ever sell your equity or the amounts get more complex, you'll need this history. Also, don't panic about "phantom income" (where you owe taxes on income you didn't receive in cash). It's frustrating but normal in partnerships. The good news is that if the company is profitable enough to make distributions, they're usually distributing enough to at least cover most of the tax burden from the K-1 income. One last tip - if your distribution amount is significantly different from your share of Box 1 income, ask your former company's accounting team for clarification. Sometimes there are timing differences or special allocations that can affect these numbers.

Has anyone used any of these online tax programs like TurboTax or H&R Block online? I've been thinking about just doing my taxes myself to avoid these kinds of issues with preparers, but I'm worried I'll miss deductions or make mistakes.

This is definitely not normal and I'd strongly advise against it. I'm a CPA and percentage-based fees tied to refund amounts are considered highly unethical in our profession. The National Association of Tax Professionals explicitly states that fees should be based on the complexity and time required for the work, not on the tax results. When a preparer's pay depends on maximizing your refund, they have a financial incentive to take aggressive positions that might not hold up under IRS scrutiny. I've seen clients get burned by this - they pay higher fees and then face audits because their preparer claimed questionable deductions to inflate the refund. A legitimate tax professional should charge a flat rate or hourly fee regardless of whether you owe money or get a refund. The fact that she's framing this as "aligning interests" is a red flag - a good preparer's interest should be preparing an accurate, compliant return, not maximizing your refund for their own benefit. I'd recommend shopping around for a new preparer who charges transparent, flat fees. Your $150 flat rate was actually quite reasonable for most returns.