If I was gifted money that was immediately transferred to my sons' 529 accounts, as was the intention, why is it counting as capital gains for myself?

[ThomasM125]

A gift is not taxable, so you should not report it on your tax return. It sounds like you reported it as an investment sale, since you mention capital gains income. You need to delete the entry you made reporting the gift.

[Hal_Al]

Receiving a gift and/or making a 529 plan contribution should not result in you having taxable capital gains.  This is clearly an entry error. 

As @ThomasM125  said, a gift is not reportable income, or a deduction,  and should not be entered on your tax return. 

For most people, you also don't enter a contribution to a 529 plan.  There is no federal deduction for making a contribution to a 529 plan, so there is no place in the TurboTax (TT) Federal program to enter it.  TT will not be tracking your contributions.

 Some states allow a deduction, on the state return. If your state is one, it will come up in the state interview; usually in the "Here's how (your state) handles income differently" section.  If you state allows a carryforward, the TT state program will track that.

 For a state list of eligible plans, see: https://www.savingforcollege.com/article/how-much-is-your-state-s-529-plan-tax-deduction-really-wort...

[michellejean-1185]

Thank you! Even if the gift was deposited into my Fidelity account, and I received a 1099-B for it? 

[Hal_Al]

"the gift was deposited into my Fidelity account, and I received a 1099-B for it"

You need to provide more detail of what's going on here.

That sounds like the gift was not cash, but securities of some kind.  And the fidelity account was something other than a 529 plan.  I don't think you can contribute securities directly to a 529 plan.  

If you cashed stocks or other securities and then contributed the money to a 529 plan, then yes, you have  a reportable capital gain.  But, that is a totally separate transaction from the contribution to the 529 plan.

It's a common tax maneuver to gift  a relative, in a lower tax bracket, appreciated securities and let him sell them and report the gain.