completely speculating here, but I don't think that the net total capital gains of child A are supposed to affect the taxes of child B ... or, they may only change things once a certain threshold/higher-bracket is met. My understanding of this process, listing the parent's taxable income and qualified dividends on the dependent's (child's) return, along with the values from siblings, is simply for the IRS to make sure no parent is trying to pull a fast one. With all this info, they can then cross check more easily.
Agreed, total mess. It may be easier next year if you just declare everything on your taxes as opposed to your children's. You'll be paying the same rate.
