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Subject:  Re: Childs mutual fund, capital gain Date:  12/19/2000  12:45 PM
Author:  TMFExRO Number:  43095 of 127754

I just found out that my 10 yr old's mutual fund distributed capital gains. (approx. $4000) What is the best way to handle this? Previously, I've added her interest income to our tax return. But, now, this is something different and completely new to me! Should I file a seperate return for her? I was unaware of the 14 yr old rule. I am the guardian of her mutual fund, it is in her name.

If the only capital gain she has is from the mutual fund distribution, you can still elect to include her income on your return. From you post I can't tell for sure, but it looks to me like you've maybe not been doing this correctly. The account should be under her SSN, and the income is hers. You deal with the "kiddie tax" issue on either Form 8615 attached to her return or Form 8814 attached to yours.

Phil Marti
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