In which of the following circumstances will income of the child be taxed at the tax rates applicable to estates and trusts?
I.Nicole, age 17, has $4,000 of interest income from Microsoft bonds.
II.Catherine, age 19, has $2,000 of royalty income from oil producing property.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

In which of the following circumstances will income of the child be taxed at the tax rates applicable to estates and trusts?
I.Nicole, age 17, has $4,000 of interest income from Microsoft bonds.
II.Catherine, age 19, has $2,000 of royalty income from oil producing property.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

The "kiddie tax" applies to unearned income of children under age 19 (or under age 24 if a full-time student) and taxes it at the rates applicable to estates and trusts. Nicole's interest income is subject to this tax, while Catherine's royalty income is not, as she is 19 and not a full-time student.

In Which of the Following Circumstances Will Income of the Child