I have a brokerage account that my partner and I opened up in 4/2005
as a Joint Tenancy in Common account. (State: California)  We lost
about $4,500 for the tax year 2005 and I know if I had an individual
account, I would be able to deduct up to $3,000 per year on my income
tax returns.    We are going to file separate returns and we are not
sure how to make this deduction.

Question: Since we both own the account, do we split the loss 50/50?
Is there a special form we need to fill out with the IRS. And if we do
split 50/50 how do we list all the stocks bought and sold on our
individual tax returns - are those split up also?

From a tax standpoint I believe you would have a partnership. Your
ownership would be your share of the money put in. If that is 50/50
then you split the income and losses 50/50.  There is an exception for
small partnerships (like an investment partnership) from having to
file a partnership tax return and you can just divide the income and
losses (realized -- from sales minus the cost of what was sold).

For all transaction shown on the 1099-B you would take your share
(1/2?) and show the proceeds and sales.

Be careful though.  Whose tax id number did you give to the brokerage
company?  If it was a SSN, the IRS will be looking to match that SSN
to a tax return.  On that person's return I would show the full
proceeds and cost and then reduce them on another line with an
explanation like ("Less portion held on behalf of:" and even include
the other person SSN.  The is a paranoid approach, I admit, but it is
safer.

Just one clarification, when you say you lost 4500, is that all from
sales or just decline in value?  Decline in values are not deductible.

The $4500 loss is when I sold stocks in 3 companies in 2005.  It
sounds like I may not be able to deduct any losses from your comment
regarding who deposited money into the brokerage account.

1. I opened the brokerage account.
2. He gave me all the funds $10k to open the account.
3. I did not deposit in any money to the account.
4. Both SSN's were given to the brokerage account.

Based on your answer, we are filing separately and so he gets to write
off all of the stock sales losses correct?

But since I was part of this brokerage account and the IRS/brokerage
has my ssn, do I need to even list any type of stock information on my
individual return or just ignore it and move on?

Thank you.