Publication 929 
2001 Tax Year 
Tax for Children Under Age 14 Who Have Investment Income of More Than $1,500
Part of a child's 2001 investment income may be subject to tax at
the parent's tax rate if:
 The child was under age 14 on January 1, 2002,
 The child's investment income was more than $1,500,
and
 The child is required to file a tax return for 2001.
These conditions are also shown in Figure 2 below.
If the parent does not or cannot choose to include the child's
income on the parent's return, use Form 8615 to figure the
child's tax. Attach the completed form to the child's Form 1040, Form
1040A, or Form 1040NR.
The following discussions explain the parental information needed
for Form 8615 and the steps to follow in figuring the child's tax.
Providing Parental Information (Form 8615, Lines AC)
On lines A and B of Form 8615, enter the parent's name and social
security number. (If the parents filed a joint return, enter the name
and social security number listed first on the joint return.) On line
C, check the box for the parent's filing status.
See Which Parent's Return To Use, earlier, for a
discussion of which parent's return information must be used on Form
8615.
Parent with different tax year.
If the parent and the child do not have the same tax year, complete
Form 8615 using the information on the parent's return for the tax
year that ends in the child's tax year.
Example.
Kimberly must use her mother's tax and taxable income to complete
her Form 8615 for calendar year 2001 (January 1  December 31).
Kimberly's mother files her tax return on a fiscal year basis (July 1
 June 30). Kimberly must use the information on her mother's
return for the tax year ending June 30, 2001, to complete her 2001
Form 8615.
Parent's return information not known timely.
If the information needed from the parent's return is not known by
the time the child's return is due (usually April 15), you can file
the return using estimates.
You can use any reasonable estimate. This includes using
information from last year's return. If you use an estimated amount on
Form 8615, write "Estimated" on the line next to the amount.
When you get the correct information, file an amended return on
Form 1040X, Amended U.S. Individual Income Tax Return.
Extension of time to file.
Instead of using estimates, you can get an automatic 4month
extension of time to file if, by April 15, 2002, you either:
 File Form 4868, Application for Automatic
Extension of Time To File U.S. Individual Income Tax Return,
or
 File an extension by phone, using tax software, or through a
tax professional.
See the instructions for Form 4868 for details.
If you have an extension, you must file the child's return by
August 15, 2002.
An extension of time to file is not an extension of time to pay.
You must make an accurate estimate of the tax for 2001. If you do not
pay the full amount due by the regular due date, the child will owe
interest and may also be charged penalties. See Form 4868 and its
instructions.
Parent's return information not available.
If a child cannot get the required information about his or her
parent's tax return, the child (or the child's legal representative)
can request the necessary information from the Internal Revenue
Service (IRS).
How to request.
After the end of the tax year, send a signed, written request for
the information to the Internal Revenue Service Center where the
parent's return will be filed. (The IRS cannot process a request
received before the end of the tax year.)
You should also consider getting an extension of time to file the
child's return, because there may be a delay in getting the requested
information.
The request must contain all of the following.
 A statement that you are making the request to comply with
section 1(g) of the Internal Revenue Code and that you have tried to
get the information from the parent.
 Proof the child is under 14 years of age (for example, a
copy of the child's birth certificate).
 Evidence the child has more than $1,500 of unearned income
(for example, a copy of the child's prior year tax return or copies of
Forms 1099 for the current year).
 The name, address, social security number (if known), and
filing status (if known) of the parent whose information is to be
shown on Form 8615.
A child's legal representative making the request should include a
copy of his or her Power of Attorney, such as Form 2848, or proof of
legal guardianship.
Illustrated Part I of Form 8615
Step 1. Figuring the Child's
Net Investment Income
(Form 8615, Part I)
The first step in figuring a child's tax using Form 8615 is to
figure the child's net investment income. To do that, use Part I
of Form 8615. For an example, see the Illustrated Part I of Form
8615.
Line 1 (Investment Income)
If the child had no earned income, enter on this line
the adjusted gross income shown on the child's return. Adjusted gross
income is shown on line 34 of Form 1040; line 20 of Form 1040A; or
line 34 of Form 1040NR. Form 1040EZ cannot be used if Form 8615 must
be filed.
If the child had earned income, figure the amount to
enter on line 1 of Form 8615 by using the worksheet in the
instructions for the form.
However, use the following worksheet if the child has excluded any
foreign earned income or deducted a loss from selfemployment or a net
operating loss from another year.
Alternate
Worksheet 
for Line 1 of
Form 8615 
A. 
Enter the amount from the
child's Form 1040, line 22, or Form 1040NR, line 23 

B. 
Enter the total of any net
loss from selfemployment, any net operating loss deduction, any
foreign earned income exclusion, and any foreign housing exclusion
from the child's Form 1040 or Form 1040NR 

C. 
Add line A and line B and
enter the total. Treat the amount on line B as positive (greater than
zero) 

D. 
Enter the child's earned income
plus any deduction the child claims on line 30 of Form 1040 or Form
1040NR. 


 Generally, the child's
earned income is the total of the amounts reported on Form 1040, lines
7, 12, and 18 (if line 12 or 18 is a loss, use zero) or Form 1040NR,
lines 8, 13, and 19 (if line 13 or 19 is a loss, use zero) 

E. 
Subtract line D from line
C. Enter the result here and on Form 8615, line 1 

Investment income defined.
Investment income is generally all income other than salaries,
wages, and other amounts received as pay for work actually done. It
includes taxable interest, dividends, capital gains, the taxable part
of social security and pension payments, and certain distributions
from trusts. Investment income includes amounts produced by assets the
child obtained with earned income (such as interest on a savings
account into which the child deposited wages).
Nontaxable income.
For this purpose, investment income includes only amounts the child
must include in total income. Nontaxable investment income, such as
taxexempt interest and the nontaxable part of social security and
pension payments, is not included.
Capital loss.
A child's capital losses are taken into account in figuring the
child's investment income. Capital losses are first applied against
capital gains. If the capital losses are more than the capital gains,
the difference (up to $3,000) is subtracted from the child's interest,
dividends, and other investment income. Any difference over $3,000 is
carried to the next year.
Income from property received as a gift.
A child's investment income includes all income produced by
property belonging to the child. This is true even if the property was
transferred to the child, regardless of when the property was
transferred or purchased or who transferred it.
A child's investment income includes income produced by property
given as a gift to the child. This includes gifts to the child from
grandparents or any other person and gifts made under the Uniform Gift
to Minors Act.
Example.
Amanda Black, age 13, received the following income.
 Dividends$600
 Wages$2,100
 Taxable interest$1,200
 Taxexempt interest$100
 Capital gains$300
 Capital losses($200)
The dividends were on stock given to her by her grandparents.
Amanda's investment income is $1,900. This is the total of the
dividends ($600), taxable interest ($1,200), and capital gains reduced
by capital losses ($300  $200 = $100). Her wages are earned
(not investment) income because they are received for work actually
done. Her taxexempt interest is not included because it is
nontaxable.
Trust income.
If a child is the beneficiary of a trust, distributions of taxable
interest, dividends, capital gains, and other investment income from
the trust are investment income to the child.
Adjustment to income.
In figuring the amount to enter on line 1, the child's investment
income is reduced by any penalty on the early withdrawal of savings.
Line 2 (Deductions)
If the child does not itemize deductions on Schedule A (Form 1040
or Form 1040NR), enter $1,500 on line 2.
If the child does itemize deductions, enter on line 2 the larger
of:
 $750 plus the child's itemized deductions that are directly
connected with the production of the investment income entered on line
1, or
 $1,500.
Directly connected.
Itemized deductions are directly connected with the production of
investment income if they are for expenses paid to produce or collect
taxable income or to manage, conserve, or maintain property held for
producing income. These expenses include custodian fees and service
charges, service fees to collect taxable interest and dividends, and
certain investment counsel fees.
These expenses are added to certain other miscellaneous itemized
deductions on Schedule A (Form 1040). Only the amount greater than 2%
of the child's adjusted gross income can be deducted. See Publication 529,
Miscellaneous Deductions, for more information.
Example 1.
Roger, age 12, has investment income of $8,000, no other income, no
adjustments to income, and itemized deductions of $300 (net of the
2%ofadjustedgrossincome limit) that are directly connected with
his investment income. His adjusted gross income is $8,000, which is
entered on line 1. Line 2 is $1,500 because that is more than the sum
of $750 and his directlyconnected itemized deductions of $300.
Example 2.
Eleanor, age 8, has investment income of $16,000 and an early
withdrawal penalty of $100. She has no other income. She has itemized
deductions of $1,050 (net of the 2%ofadjustedgrossincome limit)
that are directly connected with the production of her investment
income. Her adjusted gross income, entered on line 1, is $15,900
($16,000  $100). Line 2 is $1,800. This is the larger of:
 $750 plus the $1,050 of directly connected itemized
deductions, or
 $1,500.
Line 3
Subtract line 2 from line 1 and enter the result on this line. If
zero or less, do not complete the rest of the form. However, you must
still attach Form 8615 to the child's tax return. Figure the tax on
the child's taxable income in the normal manner.
Line 4 (Child's Taxable Income)
Enter on line 4 the child's taxable income from Form 1040, line 39;
Form 1040A, line 25; or Form 1040NR, line 38.
Line 5 (Net Investment Income)
A child's net investment income cannot be more than his or her
taxable income. Enter on line 5 the smaller of line 3 or line 4 of
Form 8615. This is the child's net investment income. If
zero or less, do not complete the rest of the form. However, you must
still attach Form 8615 to the child's tax return. Figure the tax on
the child's taxable income in the normal manner.
Illustrated Part II of Form 8615
Step 2. Figuring a Tentative
Tax at the Parent's Tax
Rate (Form 8615, Part II)
The next step in completing Form 8615 is to figure a tentative tax
on the child's net investment income at the parent's tax rate. The
tentative tax is the difference between the tax on the parent's
taxable income figured with the child's net investment income (plus
the net investment income of any other child whose Form 8615 includes
the tax return information of that parent) and the tax figured without
it.
When figuring the tentative tax, do not refigure any of the
exclusions, deductions, or credits on the parent's return because of
the child's net investment income. For example, do not refigure the
medical expense deduction.
Figure the tentative tax on lines 6 through 13. For an example, see
Illustrated Part II of Form 8615 on the next page.
Line 6 (Parent's Taxable Income)
Enter on line 6 the amount from the parent's Form 1040, line 39;
Form 1040A, line 25; Form 1040EZ, line 6; TeleFile Tax Record, line K;
Form 1040NR, line 38; or Form 1040NREZ, line 14. If the
parent's taxable income is zero or less, enter zero on line 6.
Line 7 (Net Investment Income of Other Children)
If the tax return information of the parent is also used on any
other child's Form 8615, enter on line 7 the total of the amounts from
line 5 of all the other children's Forms 8615. Do not include the
amount from line 5 of the Form 8615 being completed.
Example.
Paul and Jane Persimmon have three children, Sharon, Jerry, and
Mike, who must attach Form 8615 to their tax returns. The children's
net investment income amounts on line 5 of their Forms 8615 are:
 Sharon$800
 Jerry$600
 Mike$1,000
Line 7 of Sharon's Form 8615 will show $1,600, the total of the
amounts on line 5 of Jerry's and Mike's Forms 8615.
Line 7 of Jerry's Form 8615 will show $1,800 ($800 + $1,000).
Line 7 of Mike's Form 8615 will show $1,400 ($800 + $600).
Other children's information not available.
If the net investment income of the other children is not available
when the return is due, either file the return using estimates or get
an extension of time to file. Estimates and extensions are discussed
earlier under Providing Parental Information (Form 8615, Lines
AC).
Line 8 (Parent's Taxable Income Plus Children's Net
Investment Income)
Enter on this line the total of lines 5, 6, and 7. Then compare the
amount on this line with the amount listed below for the parent's
filing status.
 Single$27,050
 Married filing jointly or qualifying
widow(er)$45,200
 Married filing separately$22,600
 Head of household$36,250
If the amount on this line is not more than the amount listed
above, do not complete lines 9 through 16 of Form 8615. Skip the rest
of this discussion and the discussions for lines 9 through 16 that
follow.
If the amount on this line is more than the amount listed above,
you must determine the amount of net capital gain it
includes, if any, before completing line 9 of Form 8615.
Net capital gain on line 8.
If neither the child nor the parent nor any other child has net
capital gain, the net capital gain on line 8 is zero. Net capital gain
is the smaller of the gain, if any, on line 16 of schedule D or the
gain, if any, on line 17 of schedule D. If Schedule D is not required,
it is the amount on line 13 of Form 1040 or line 10 of Form 1040A.
If the child, parent, or any other child has net capital gain,
figure the amount of net capital gain included on line 8 by adding
together the net capital gain amounts included on lines 5, 6, and 7 of
Form 8615. Use the following discussions to find these amounts.
Net capital gain on line 5.
If the child has a net capital gain, use the appropriate worksheet
below to find the amount of net capital gain included on line 5.
Use the following worksheet only if line 2 of the child's Form 8615
is $1,500 and lines 3 and 5 are the same amount.
Line 5 Worksheet #1 
A. 
Enter the child's net
capital gain 

B. 
Enter the amount from line
1 of the child's Form 8615 

C. 
Divide line A by line B
(but do not enter more than 1) 

D. 
Multiply $1,500 by line C


E. 
Net capital gain on
line 5. Subtract line D from line A (but do not enter less than
zero or more than the amount on line 5 of Form 8615) 

Use the following worksheet only if line 2 of the child's Form 8615
is more than $1,500 and lines 3 and 5 are the same amount.
Line 5
Worksheet #2 
A. 
Enter the child's net
capital gain 

B. 
Enter the child's itemized
deductions directly connected with the production of the child's net
capital gain 

C. 
Subtract line B from line A


D. 
Enter the amount from line
1 of the child's Form 8615 

E. 
Divide line A by line D
(but do not enter more than 1) 

F. 
Multiply $750 by line E 

G. 
Net capital gain on
line 5. Subtract line F from line C (but do not enter less than
zero or more than the amount on line 5 of Form 8615) 

Use the following worksheet only if line 5 of the child's Form 8615
is less than line 3.
Line 5
Worksheet #3 
A. 
Enter the child's net
capital gain 

B. 
If the child itemized
deductions, enter the child's itemized deductions directly connected
with the production of the child's net capital gain 

C. 
Subtract line B from line A


D. 
If the child can claim his
or her own exemption, enter $2,900*. Otherwise, enter zero 

E. 
If the child itemized
deductions, enter the child's itemized deductions not
directly connected with the production of the child's net capital
gain. Otherwise, enter the child's standard deduction 

F. 
Add lines D and E 

G. 
Enter the child's adjusted
gross income (line 34 of Form 1040, line 20 of Form 1040A, or line 34
of Form 1040NR) 

H. 
Divide line A by line G
(but do not enter more than 1) 

I. 
Multiply line F by line H


J. 
Net capital gain on
line 5. Subtract line I from line C. Enter the result here (but
do not enter less than zero or more than the amount on line 5 of Form
8615) 

* If you enter more
than $132,950 on line G, see Deduction for Exemptions
WorksheetLine 38 in the Form 1040 instructions for the
amount to enter on line D. 
Net capital gain on line 6.
If the parent has a net capital gain, its full amount is the net
capital gain included on line 6.
Net capital gain on line 7.
The net capital gain included on line 7 is the total of the amounts
of net capital gain included on line 5 of the other children's Forms
8615. Find the amount for each other child as explained earlier under
Net capital gain on line 5. (Do not attach the other
children's Forms 8615 to the child's return.)
Line 9 (Tax on Parent's Taxable Income Plus Children's Net
Investment Income)
Figure the tax on the amount on line 8 using the Tax Table, the Tax
Rate Schedules, the Capital Gain Tax Worksheet (in the Form
1040, 1040A, or 1040NR instructions), the Schedule D Tax
Worksheet (in the Schedule D instructions) or Schedule D or J
(Form 1040), as follows.
 If line 8 does not include any net capital gain,
use the Tax Table or Tax Rate Schedules to figure this tax. But if
Schedule J, Farm Income Averaging, is used to figure the
tax on the parent's return, use it to figure this tax.
 If line 8 does include any net capital gain, use
the Capital Gain Tax Worksheet to figure this tax unless
the child, parent, or any other child has unrecaptured section 1250
gain, 28% rate gain, qualified 5year gain, or an amount on Form 4952,
line 4e. In that case, use Schedule D to figure this tax, or if there
is unrecaptured section 1250 gain or 28% rate gain, use the
Schedule D Tax Worksheet. But if Schedule J is used to
figure the tax on the parent's return, use it to figure this
tax.
Using the Capital Gain Tax Worksheet for line 9 tax.
If you use the Capital Gain Tax Worksheet to figure the
line 9 tax on Form 8615, complete that worksheet as follows.
 On line 1, enter the amount from line 8 of Form 8615.
 On line 2, enter the amount of the net capital gain on line
8 of Form 8615. (See the earlier discussion for line 8.)
 Complete lines 3 through 15 following the worksheet
instructions. (Use the parent's filing status to complete lines 4, 5,
and 14.)
Enter the amount from line 15 of the Capital Gain Tax
Worksheet on line 9 of Form 8615 and check the box on that line.
Do not attach this worksheet to the child's return.
Using Schedule D for line 9 tax.
Use Schedule D to figure the line 9 tax on Form 8615 if the child,
parent, or any other child has qualified 5year gain or an amount on
Form 4952, line 4e, and none of them has unrecaptured section 1250
gain or 28% rate gain.
If you must use Schedule D, first complete any Schedule D required
for the child, parent, or any other child. Then figure the tax using
Part IV of another Schedule D as a worksheet. (Do not
attach this worksheet Schedule D to the child's return.)
Complete this worksheet Schedule D as follows.
 On line 19, enter zero.
 On line 20, enter the amount from line 8 of Form
8615.
 On line 21, enter the net capital gain included on line 8 of
Form 8615. (See the earlier discussion for line 8.)
 On line 22, enter the total of the amounts on line 22 of
each completed Schedule D.
 Complete lines 23 through 40, following the Schedule D
instructions. (Use the parent's filing status to complete lines 25,
26, and 39.) If you need to complete line 29, enter zero if neither
the child, nor the parent, nor any other child has qualified 5year
gain. Otherwise, enter the amount of qualified 5year gain included in
the net capital gain on line 21 of this worksheet. Figure this amount
as explained next under Figuring qualified 5year gain (line
29).
Enter the amount from line 40 of this worksheet Schedule D on
line 9 of Form 8615 and check the box on that line.
Figuring qualified 5year gain (line 29).
If the child, parent, or any other child has qualified 5year gain,
figure the amount of qualified 5year gain included in the net capital
gain on line 21 of the worksheet Schedule D using the following
worksheet.
Worksheet for
Line 29 of Schedule D (Line 9 Tax) 
1. 
Enter the amount, if any,
from line 7 of the child's Qualified 5Year Gain Worksheet
in the Schedule D instructions 


If line 1 is zero or blank,
skip lines 2 through 4, enter zero on line 5, and go to line 6. 

2. 
Enter the amount from the
last line of the child's completed Line 5 Worksheet. (See
the earlier discussion for line 8 of Form 8615.) 

3. 
Enter the amount from line
A of the child's completed Line 5 Worksheet 

4. 
Divide line 2 by line 3.
Enter the result as a decimal 

5. 
Multiply line 1 by line
4 

6.. 
If no other child has
qualified 5year gain, enter zero. Otherwise, repeat lines 1 through 5
above for each other child who has qualified 5year gain and enter the
total of the line 5 amounts for those other children 

7. 
Enter the amount, if any,
from line 7 of the parent's Qualified 5Year Gain Worksheet
in the Schedule D instructions 

8. 
Add lines 5, 6, and 7. Also
enter this amount on line 29 of the worksheet Schedule D 


Using the Schedule D Tax Worksheet for line 9 tax.
Use the Schedule D Tax Worksheet in the Schedule D
instructions to figure the line 9 tax on Form 8615 if the child,
parent, or any other child has unrecaptured section 1250 gain or 28%
rate gain. If you must use the Schedule D Tax Worksheet,
first complete any Schedule D and any actual Schedule D Tax
Worksheet required for the child, parent, or any other child.
Then figure the line 9 tax using another Schedule D
Tax Worksheet. (Do not attach this Schedule D Tax
Worksheet to the child's return.)
Complete this Schedule D Tax Worksheet as follows.
 On line 1, enter the amount from line 8 of Form 8615.
 On line 2, enter the net capital gain included on line 8 of
Form 8615. (See the earlier discussion for line 8.)
 On line 3, enter the total of the amounts, if any, on line
22 of each actual Schedule D.
 On line 4, follow the worksheet instructions.
 Leave line 5 blank.
 On line 6, enter zero if neither the child, parent, nor any
other child has 28% rate gain (line 15 of Schedule D). Otherwise,
enter the amount of 28% rate gain included in the net capital gain on
line 2. Figure this amount as explained later under Figuring 28%
rate gain (line 6).
 On line 7, enter zero if neither the child, parent, nor any
other child has unrecaptured section 1250 gain (line 19 of Schedule
D). Otherwise, enter the amount of unrecaptured section 1250 gain
included in the net capital gain on line 2. Figure this amount as
explained later under Figuring unrecaptured section 1250 gain
(line 7).
 Complete lines 8 through 37, following the worksheet
instructions. (Use the parent's filing status to complete lines 11,
15, and 36.) If you need to complete line 17, enter zero if neither
the child, parent, nor any other child has qualified 5year gain (line
7 of the Qualified 5Year Gain Worksheet in the Schedule D
instructions). Otherwise, enter the amount of qualified 5year gain
included in the net capital gain on line 2. Figure this amount as
explained later under Figuring qualified 5year gain (line
17).
Enter the amount from line 37 of this Schedule D Tax
Worksheet on line 9 of Form 8615 and check the box on that line.
Figuring 28% rate gain (line 6).
If the child, parent, or any other child has 28% rate gain, figure
the amount of 28% rate gain included in the net capital gain on line 2
using the following worksheet.
Worksheet for
Line 6 of the Schedule D Tax Worksheet (Line 9 Tax) 
1. 
If the child does not have
28% rate gain, skip this line and lines 2 through 5, enter zero on
line 6, and go to line 7. Otherwise, if an actual Schedule D Tax
Worksheet was required for the child, skip this line, enter the
amount from line 6 of that worksheet on line 2 below, and go to line
3. If that worksheet was not required, enter the total of lines 7 and
15 of the child's Schedule D, but not less than zero 

2. 
Enter the smaller of line 1
above or line 15 of the child's Schedule D, but not less than zero 


If line 2 is zero, skip lines
3 through 5, enter zero on line 6, and go to line 7. 

3. 
Enter the amount from the last line of
the child's completed Line 5 Worksheet. (See the earlier
discussion for line 8 of Form 8615.) 

4. 
Enter the amount from line A of the
child's completed Line 5 Worksheet 

5. 
Divide line 3 by line 4. Enter the
result as a decimal 

6. 
Multiply line 2 by line 5 

7. 
If no other child has 28% rate gain,
enter zero. Otherwise, repeat lines 1 through 6 above for each other
child who has 28% rate gain and enter the total of the line 6 amounts
for those other children 

8. 
If the parent does not have 28% rate
gain, skip this line, enter zero on line 9, and go to line 10.
Otherwise, if an actual Schedule D Tax Worksheet was
required for the parent, skip this line, enter the amount from line 6
of that worksheet on line 9 below, and go to line 10. If that
worksheet was not required, enter the total of lines 7 and 15 of the
parent's Schedule D, but not less than zero 

9. 
Enter the smaller of line 8 above or
line 15 of the parent's Schedule D, but not less than zero 

10. 
Add lines 6, 7, and 9. Also enter this
amount on line 6 of the Schedule D Tax Worksheet 


Figuring unrecaptured section 1250 gain (line 7).
If the child, parent, or any other child has unrecaptured section
1250 gain, figure the amount of unrecaptured section 1250 gain
included in the net capital gain on line 2 using the following
worksheet.
Worksheet for
Line 7 of the Schedule D Tax Worksheet (Line 9 Tax) 
1. 
Enter the amount, if any,
from line 19 of the child's Schedule D 


If line 1 is zero or blank,
skip lines 2 through 4, enter zero on line 5, and go to line 6. 

2. 
Enter the amount, if any, from the last
line of the child's completed Line 5 Worksheet. (See the
earlier discussion for line 8 of Form 8615.) 

3. 
Enter the amount from line
A of the child's completed Line 5 Worksheet 

4. 
Divide line 2 by line 3.
Enter the result as a decimal 

5. 
Multiply line 1 by line 4


6. 
If no other child has
unrecaptured section 1250 gain, enter zero. Otherwise, repeat lines 1
through 5 for each other child who has unrecaptured section 1250 gain
and enter the total of the line 5 amounts for those children 

7. 
If the parent does not have
unrecaptured section 1250 gain, enter zero. Otherwise, enter the
amount from line 19 of the parent's Schedule D 

8. 
Add lines 5, 6, and 7. Also enter this
amount on line 7 of the Schedule D Tax Worksheet 


Figuring qualified 5year gain (line 17).
If the child, parent, or any other child has qualified 5year gain,
figure the amount of qualified 5year gain included in the net capital
gain on line 2 using the following worksheet.
Worksheet for
Line 17 of the Schedule D Tax Worksheet (Line 9 Tax) 
1. 
Enter the amount, if any, from line 7 of
the child's Qualified 5Year Gain Worksheet in the Schedule
D instructions 


If line 1 is zero or blank,
skip lines 2 through 4, enter zero on line 5, and go to line 6. 

2. 
Enter the amount from the last line of
the child's completed Line 5 Worksheet. (See the earlier
discussion for line 8 of Form 8615.) 

3. 
Enter the amount from line A of the
child's completed Line 5 Worksheet 

4. 
Divide line 2 by line 3. Enter the
result as a decimal 

5. 
Multiply line 1 by line 4 

6. 
If no other child has qualified 5year
gain, enter zero. Otherwise, repeat lines 1 through 5 above for each
child who has qualified 5year gain and enter the total of the line 5
amounts for those other children 

7. 
If the parent has no qualified 5year
gain, enter zero. Otherwise, enter the amount from line 7 of the
parent's Qualified 5Year Gain Worksheet in the Schedule D
instructions 

8. 
Add lines 5, 6 and 7. Also enter this
amount on line 17 of the Schedule D Tax Worksheet 


Using Schedule J for line 9 tax.
Use Schedule J, Farm Income Averaging, to figure the
line 9 tax on Form 8615 if Schedule J is used to figure the tax on the
parent's return. First complete the actual Schedule J for the parent,
then use another Schedule J as a worksheet to figure the
tax to enter on line 9 of Form 8615. (Do not attach this worksheet to
the child's return.)
Complete this worksheet Schedule J as follows.
 On line 1, enter the amount from line 8 of Form 8615.
 On line 2, enter the amount from the parent's Schedule J,
line 2.
 Complete line 3 following the Schedule J
instructions.
 Complete line 4. If line 8 of Form 8615 includes any net
capital gain, use the Capital Gain Tax Worksheet to figure
the tax amount on this line unless the child, parent, or
any other child has unrecaptured section 1250 gain, 28% rate gain,
qualified 5year gain, or an amount on Form 4952, line 4e. In that
case, use Schedule D to figure this tax or, if there is unrecaptured
section 1250 gain or 28% rate gain, use the Schedule D Tax
Worksheet. Follow the earlier instructions under Using the
Capital Gain Tax Worksheet for line 9 tax, Using Schedule D
for line 9 tax, or Using the Schedule D Tax Worksheet for
the line 9 tax, except use the amount on line 3 of this
worksheet (instead of the amount on line 8 of Form 8615) in item (1)
of those instructions.
 On lines 5 through 16, enter the amounts from the parent's
Schedule J, lines 5 through 16.
 Complete line 17 following the Schedule J
instructions.
 On lines 18 through 21, enter the amounts from the parent's
Schedule J, lines 18 through 21.
 Complete line 22 following the Schedule J
instructions.
Enter the amount from line 22 of this worksheet Schedule J on
line 9 of Form 8615 and check the box on that line.
Line 10 (Parent's Tax)
Enter on line 10 the amount from the parent's Form 1040, line 40;
Form 1040A, line 26 (minus any alternative minimum tax); Form 1040EZ,
line 10; TeleFile Tax Record, line K; Form 1040NR, line 39; or Form
1040NREZ, line 15. Do not include the tax, if any,
from Form 4972 or Form 8814.
Line 11 (Tentative Tax)
Subtract line 10 from line 9 and enter the result on this line.
This is the tentative tax.
If line 7 is blank, skip lines 12a and 12b and enter the amount
from line 11 on line 13.
Lines 12a and 12b (Dividing the Tentative Tax)
If an amount is entered on line 7, divide the tentative tax shown
on line 11 among the children according to each child's share of the
total net investment income. This is done on lines 12a, 12b, and 13.
Add the amount on line 7 to the amount on line 5 and enter the total
on line 12a. Divide the amount on line 5 by the amount on line 12a and
enter the result, as a decimal, on line 12b.
Example.
In the earlier example under Line 7 (Net Investment Income of
Other Children), Sharon's Form 8615 shows $1,600 on line 7. The
amount entered on line 12a is $2,400, the total of the amounts on
lines 5 and 7 ($800 + $1,600). The decimal on line 12b is .333,
figured as follows and rounded to three places.
Line 13 (Child's Share of Tentative Tax)
If an amount is entered on line 7, multiply line 11 by the decimal
on line 12b and enter the result on line 13. This is the child's share
of the tentative tax.
Step 3. Figuring the
Child's Tax
The final step in figuring a child's tax using Form 8615 is to
determine the larger of:
 The total of:
 The child's share of the tentative tax based on the parent's
tax rate, plus
 The tax on the child's taxable income in excess of net
investment income, figured at the child's tax rate, or
 The tax on the child's taxable income, figured at the
child's tax rate.
This is the child's tax. It is figured on lines 14 through 18
of Form 8615.
Line 14 (Child's Taxable Income in Excess of Net Investment
Income)
If lines 4 and 5 of Form 8615 are the same, the child's taxable
income does not exceed the child's net investment income. Skip line
14, enter zero on line 15, and go to line 16. Also skip the rest of
this discussion and the discussion for line 15 that follows.
If lines 4 and 5 are not the same, subtract line 5 from line 4 and
enter the result on line 14. Then, before completing line 15, you must
determine the amount of net capital gain, if any, included on line 14.
Net capital gain on line 14.
If the child does not have any net capital gain, the net capital
gain included on line 14 is zero. For an explanation of net capital
gain, see Net capital gain on line 8 in the earlier
discussion for line 8 of Form 8615.
If the child has net capital gain, the amount included on line 14
is the amount from line A of the child's completed Line 5
Worksheet minus the amount from the last line of that worksheet.
(See the earlier discussion for line 8 of Form 8615.)
Line 15 (Tax on Child's Taxable Income in Excess of Net
Investment Income).
Figure the tax on the amount on line 14 using the Tax Table, the
Tax Rate Schedules, the Capital Gain Tax Worksheet, the
Schedule D Tax Worksheet, or Schedule D or J (Form 1040),
as follows.
 If line 14 does not include any net capital gain,
use the Tax Table or Tax Rate Schedules (or Schedule J, if applicable)
to figure this tax.
 If line 14 does include any net capital gain, use
the Capital Gain Tax Worksheet to figure this tax unless
the child has unrecaptured section 1250 gain, 28% rate gain, qualified
5year gain, or an amount on Form 4952, line 4e. In that case, use
Schedule D to figure this tax or, if the child has unrecaptured
section 1250 gain or 28% rate gain, use the Schedule D Tax
Worksheet. (But use Schedule J instead, if it applies.)
Tax computation for certain dependents. Generally, if
the child can be claimed as a dependent on someone else's tax return,
you can reduce any tax amount figured using the 2001 Tax Table or Tax
Rate Schedules (including any line 15 tax figured on any worksheet or
schedule described in the following paragraphs) by onethird of the
tax amount or $300, whichever is smaller.
This reduction does not apply to the following
dependents.
 A child who received (before any offsets) an advance payment
of his or her 2001 taxes.
 A child who files Form 1040NR.
Using the Capital Gain Tax Worksheet for line 15 tax.
If you use the Capital Gain Tax Worksheet to figure the
line 15 tax on Form 8615, complete that worksheet as follows.
 On line 1, enter the amount from line 14 of Form
8615.
 On line 2, enter the amount of the net capital gain included
on line 14 of Form 8615. (See the earlier discussion for line
14.)
 Complete lines 3 through 15 following the worksheet
instructions. Use the child's filing status to complete lines 4, 5,
and 14. (Before completing lines 4 and 14, see the caution, Tax
computation for certain dependents, earlier.)
Enter the amount from line 15 of this Capital Gain Tax
Worksheet on line 15 of Form 8615 and check the box on that
line. Do not attach this worksheet to the child's return.
Using Schedule D for line 15 tax.
Use Part IV of Schedule D to figure the line 15 tax on Form 8615 if
the child has qualified 5year gain or an amount on Form 4952, line
4e, and no unrecaptured section 1250 gain or 28% rate gain. If you
must use Schedule D, first complete any actual Schedule D required for
the child. Then figure the line 15 tax using Part IV of another
Schedule D as a worksheet. (Do not attach this worksheet Schedule D to
the child's return.)
Complete this worksheet Schedule D as follows.
 On line 19, enter zero.
 On line 20, enter the amount from line 14 of Form
8615.
 On line 21, enter the net capital gain included on line 14
of Form 8615. (See the earlier discussion for line 14.)
 On line 22, enter the amount from line 22 of the child's
actual Schedule D.
 Complete lines 23 through 40, following the Schedule D
instructions. Use the child's filing status to complete lines 25, 26,
and 39. (Before completing lines 25 and 39, see the caution, Tax
computation for certain dependents, earlier.) If you need to
complete line 29, enter zero if the child has no qualified 5year gain
(line 7 of the Qualified 5year Gain Worksheet in the
Schedule D instructions). Otherwise, in the earlier discussion for
line 9 of Form 8615, see the Worksheet for Line 29 of Schedule D
(Line 9 Tax) or the Worksheet for Line 17 of the Schedule D
Tax Worksheet (Line 9 Tax), whichever was used. Subtract line 5
of that worksheet from line 1 of that worksheet and enter the result
on line 29 of this worksheet Schedule D.
Enter the amount from line 40 of this worksheet Schedule D on
line 15 of Form 8615.
Using the Schedule D Tax Worksheet for line 15 tax.
Use the Schedule D Tax Worksheet in the Schedule D
instructions to figure the line 15 tax on Form 8615 if the child has
unrecaptured section 1250 gain or 28% rate gain. If you must use the
Schedule D Tax Worksheet, first complete any Schedule D and
any actual Schedule D Tax Worksheet required for the child.
Then figure the line 15 tax using another Schedule D
Tax Worksheet. (Do not attach thisSchedule D Tax Worksheet
to the child's return.)
Complete this Schedule D Tax Worksheet as follows.
 On line 1, enter the amount from line 14 of Form
8615.
 Leave lines 2 and 3 blank.
 On line 4, enter the net capital gain included on line 14 of
Form 8615. (See the earlier discussion for line 14.)
 Leave line 5 blank.
 On line 6, enter zero if the child has no 28% rate gain
(line 15 of Schedule D). Otherwise, see the Worksheet for Line 6
of the Schedule D Tax Worksheet (Line 9 Tax) under Using
the Schedule D Tax Worksheet for line 9 tax, earlier. Subtract
line 8 of that worksheet from line 2 of that worksheet, and enter the
result.
 On line 7, enter zero if the child has no unrecaptured
section 1250 gain (line 19 of Schedule D). Otherwise, in the earlier
discussion for line 9 of Form 8615, see the Worksheet for Line 7
of the Schedule D Tax Worksheet (Line 9 Tax). Subtract line 5 of
that worksheet from line 1 of that worksheet and enter the result on
line 7 of this worksheet.
 Complete lines 8 through 37, following the worksheet
instructions. Use the child's filing status to complete lines 11, 15,
and 36. (Before completing lines 15 and 36, see the caution, Tax
computation for certain dependents, earlier.) If you need to
complete line 17, enter zero if the child has no qualified 5year gain
(line 7 of the Qualified 5Year Gain Worksheet in the
Schedule D instructions). Otherwise, in the earlier discussion for
line 9 of Form 8615, see the Worksheet for Line 17 of the
Schedule D Tax Worksheet (Line 9 Tax). Subtract line 5 of that
worksheet from line 1 of that worksheet and enter the result on line
17 of this worksheet.
Enter the amount from line 37 of this Schedule D Tax
Worksheet on line 15 of Form 8615 and check the box on that
line.
Using Schedule J for line 15 tax.
If Schedule J applies, use it as a worksheet to figure the tax to
enter on line 15 of Form 8615. On line 1 of this worksheet, enter the
amount from line 14 of Form 8615. Complete lines 2 through 22
following the worksheet instructions. Use the child's filing status to
complete lines 4, 8, 12, and 16. (Before completing line 4, see the
caution, Tax computation for certain dependents, earlier.)
Enter the amount from line 22 of this worksheet Schedule J on line
15 of Form 8615 and check the box on that line. Do not attach this
worksheet to the child's return.
Line 16 Combined Tax
Add lines 13 and 15 and enter the total on line 16. This is the
child's tax figured at the parent's rate on net investment income and
the child's rate on other income.
Line 17 (Tax at Child's Rate)
Figure the tax on line 4 (the child's taxable income). Use the Tax
Table, the Tax Rate Schedules, the Capital Gain Tax
Worksheet, the Schedule D Tax Worksheet, or the
child's actual Schedule D or J, whichever applies. (Before completing
line 17, see the caution, Tax computation for certain
dependents, earlier.) Enter the tax amount on line 17. If it is
from the Capital Gain Tax Worksheet, the Schedule D
Tax Worksheet, Schedule D, or Schedule J, check the box on that
line.
Line 18 (Tax)
Enter on line 18 the larger of line 16 or line 17. Also enter this
amount on the child's Form 1040, line 40; Form 1040A, line 26; or Form
1040NR, line 39. This is the child's tax.
Alternative Minimum Tax
A child may be subject to alternative minimum tax (AMT) if he or
she has certain items given preferential treatment under the tax law.
These items include accelerated depreciation and certain taxexempt
interest income. The AMT may also apply if the child has passive
activity losses or certain distributions from estates or trusts.
For more information on who is liable for AMT and how to figure it,
get Form 6251.
Limit on exemption amount.
Ordinarily, single people can subtract a $35,750 exemption amount
from their AMT taxable income. However, a child who files Form 8615
has a limited exemption amount. The child's exemption amount for 2001
is limited to the child's earned income plus $5,350. Figure the
child's allowable exemption amount on the worksheet in the
instructions for line 22 of Form 6251.
Illustrated Example
This example shows how to fill out Forms 8615 and 1040A for Sara
Brown. It also shows how to use the Capital Gain Tax Worksheet
in the Form 1040A instructions to figure Sara's tax.
John and Laura Brown have one child, Sara. She is 13 and has $2,100
taxable interest and dividend income, $700 capital gain distributions,
and $1,550 earned income. She does not itemize deductions and did not
receive an advance payment of her 2001 taxes during 2001. John and
Laura file a joint return with John's name and social security number
listed first. They claim three exemptions, including an exemption for
Sara, on their return.
Because she is under age 14 and has more than $1,500 investment
income, part of her income may be subject to tax at her parents' rate.
A completed Form 8615 must be attached to her return.
Sara's father, John, fills out Sara's return. He completes her Form
1040A through line 25, then begins completing her Form 8615.
John enters his name and social security number on Sara's Form 8615
because his name and number are listed first on the joint return he
and Laura are filing. He checks the box for married filing jointly.
He enters Sara's investment income, $2,800, on line 1. Sara does
not itemize deductions, so John enters $1,500 on line 2. He enters
$1,300 ($2,800  $1,500) on line 3.
Sara's taxable income, as shown on line 25 of her Form 1040A, is
$2,550. This is her total income ($4,350) minus her standard deduction
($1,800). Her standard deduction is limited to the amount of her
earned income plus $250. John enters $2,550 on line 4.
John compares lines 3 and 4 and enters the smaller amount, $1,300,
on line 5.
John enters $48,000 on line 6. This is the taxable income from line
39 of their joint Form 1040 return. Sara is an only child, so line 7
is blank. He adds line 5 ($1,300), line 6 ($48,000), and line 7
(blank) and enters $49,300 on line 8.
Because Sara's capital gain distributions are included on line 5,
John uses Line 5 Worksheet #1 (in the discussion for line
8, earlier) to figure out that $325 net capital gain is included on
line 5. He completes that worksheet as follows.
Line 5
Worksheet #1 
A. 
Enter the child's net
capital gain 
700 
B. 
Enter the amount from line
1 of the child's Form 8615 
2,800 
C. 
Divide line A by line B
(but do not enter more than 1) 
.25 
D. 
Multiply $1,500 by line C

375 
E. 
Net capital gain on
line 5. Subtract line D from line A (but do not enter less than
zero or more than the amount on line 5 of Form 8615) 
325 
Therefore, line 8 of Sara's Form 8615 also includes net capital
gain of $325. John uses the Capital Gain Tax Worksheet (in
the Form 1040A instructions) and follows the instructions under
Using the Capital Gain Tax Worksheet for line 9 tax,
earlier, to figure the $7,883 tax to enter on line 9 of Sara's Form
8615. He completes that worksheet as shown on Filledin Capital
Gain Tax Worksheet #1.
He enters the tax from his and Laura's Form 1040 ($7,557) on line
10 of Sara's Form 8615, subtracts that amount from the $7,883 on line
9, and enters the $326 remainder on line 11. Because line 7 is blank,
John skips lines 12a and 12b and enters $326 on line 13.
John subtracts line 5 ($1,300) from line 4 ($2,550) and enters the
result, $1,250 on line 14. Using the instructions for line 14 earlier,
John subtracts the net capital gain included on line 5 ($325) from
Sara's net capital gain ($700) to figure the $375 net capital gain
included on line 14. He uses another Capital Gain Tax Worksheet
and follows the instructions under Using the Capital Gain
Tax Worksheet for line 15 tax, earlier, to figure the $126 tax
to enter on Form 8615, line 15. He completes that worksheet as shown
on Filledin Capital Gain Tax Worksheet #2.
John adds lines 13 and 15 of Form 8615 and enters the sum, $452, on
line 16. Then he uses another Capital Gain Tax Worksheet to
figure the $256 tax on Sara's $2,550 taxable income to enter on Form
8615, line 17. He completes that worksheet as shown on Filledin
Capital Gain Tax Worksheet #3.
Finally, John compares lines 16 and 17 and enters the larger
amount, $452, on line 18 of Sara's Form 8615. He also enters that
amount on line 26 of Sara's Form 1040A.
John also completes Schedule 1, Form 1040A (not shown) for Sara.
Form 1040A, page 1, for Sara L. Brown
Form 1040A, page 2, for Sara L. Brown
Form 8615 for Sara L. Brown
Filledin Capital Gain Tax Worksheet #1 (showing 7,883)
Filledin Capital Gain Tax Worksheet #2 (showing 126)
Filledin Capital Gain Tax Worksheet #3 (showing 256)
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