The Nelsons make gifts of appreciated securities to their dependent daughter (age 20) and son (age 21), neither of which is a student. If the children sell the securities shortly thereafter, the kiddie tax will apply to tax the gain at the parents' tax rate.

Question

Quizplus · Accepted Answer

The kiddie tax applies to unearned income of children under age 19 or full-time students under age 24. Since neither child is a student and both are over 19, the kiddie tax does not apply.

The Nelsons Make Gifts of Appreciated Securities to Their Dependent