Kiddie Tax, Unearned Income, Capital Gains

[G2R]

Client's kid has $250 dividends, $200 capital gain distributions, and $1300 in capital gains.   So I'm in that over $1100, but under $2200 spot for the kiddie tax rules. 

Can someone please confirm:

1. The fact that the child had capital gains means I cannot put the income on the parent's return.  (Not that I want to, I think the tax is zero, but I just want to confirm this anyway.)
2. If I'm calculating this right, the child still owes ZERO in taxes because everything except the capital gains is below $1100 and the capital gains that bumped them over $1100 are still taxed at 0 because they are capital gains. 
3. If all the above is true, and the tax is still zero, am I still required to file the return for the child?

TIA!

[Lion EA]

1. Only interest and dividends on parents' returns. But, as you say, why raise their AGI? With capital gains, all must be on child's return.

2. Yes.

3. I do. It starts the statute of limitations running. No return; no SOL.

[G2R]

7 hours ago, Lion EA said:

1. Only interest and dividends on parents' returns. But, as you say, why raise their AGI? With capital gains, all must be on child's return.

2. Yes.

3. I do. It starts the statute of limitations running. No return; no SOL.

Thanks Lion EA!  

One more quick question.  Their other kid has $2k in capital losses.  Would you file a return for that kid just to keep the carryforward?  

[Abby Normal]

3 hours ago, GGRNY said:

Would you file a return for that kid just to keep the carryforward?  

No, the IRS doesn't track your carryovers from year to year, even though they probably should. Prepare the return so you have the rollover for next year, just don't bother filing it... unless you're concerned about the SOL.

[Lion EA]

For a young kid who hasn't filed yet, I don't push to have him file when he/she has no filing requirement. Once a child has filed, I do push for him/her to NOT miss a year.

[G2R]

Thanks to both of you!

[TRUST THE TAX PROS]

If a child has $80000 in gross proceeds, but $0 capital gains (cost basis is also $80000); still required to file return?

[Burke]

All IRS knows is $80K proceeds.   File the return to establish basis, or else kid will get a CP2000 and bill.    

[Catherine]

4 hours ago, Burke said:

File the return to establish basis, or else kid will get a CP2000 and bill.  

And the parents will blame YOU for not filing the return now.