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How much UNEARNED income can a child have in 2010 without BOTH having to pay ANY taxes AND the child having to file a income tax return?


I would like to take up to $950 in net short-term gains and reposition the sales proceeds into other securities which would have the effect of raising the cost basis in the account for future income-tax purposes and avoid any taxes on the gain of up to $950.

No problem, but the child will have to file a zero tax return. Because there will be Schedule D transactions, without the Schedule D calculating the gain the IRS won't know it totals less than $950. Because Schedule D is required the parents cannot include this on their return.

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