Taxation of Liquidation of IRA in Minor's Name

[edrakin]

My client is the guardian/conservator of a four-year-old minor. The four-year-old needed a guardian because he inherited an IRA worth $48k. The Court has issued an Order requiring that the IRA be liquidated and placed into a restricted bank account accessible only by the minor upon turning 18 years of age. 

The four-year-old has no other income, but a 1099-R showing $48k of income this year not only triggers a filing requirement but results in a tax. I have not encountered this situation before and am reading there may be a kiddie tax issue as well. The minor's parent is not his guardian because she stole from him, and she is hostile to the guardian and will not provide her Social Security number.

In this situation, do I simply file a 1040 in the minor's name (signed by the guardian) reporting only the 1099-R? The guardian can then use a portion of the proceeds from the IRA liquidation to pay the tax, and that will be the end of it? Or does the client need to get the minor's parent involved in some way? 

Thank you in advance for any insight. 

[BobKamman]

When all else fails, read the Instructions  (to Form 8615) --

Parent's return information unavailable. If a child can’t get the required information about their parent's tax return, the child (or the child's legal representative) can request the necessary information from the IRS.

How to request. After the end of the tax year, send a signed, written request for the information to the Internal Revenue Service Center where the parent's return will be filed. (The IRS can’t process a request received before the end of the tax year.)

https://www.irs.gov/instructions/i8615#en_US_2024_publink1000101054 
The request must contain all of the following.

• A statement that you are making the request to comply with section 1(g) of the Internal Revenue Code and that you have tried to get the information from the parent.
• Proof of the child's age (for example, a copy of the child's birth certificate).
• Evidence the child has more than $2,600 of unearned income (for example, a copy of the child's prior year tax return or copies of Forms 1099 for the current year).
• The name, address, social security number (SSN) (if known), and filing status (if known) of the parent whose information is to be shown on Form 8615.

A child's legal representative making the request should include a copy of their Power of Attorney, such as Form 2848, or proof of legal guardianship.