My 4 Year old received a 1099-B for her custodial account

[tomvat]

My 4 year old owned some 21st Century Fox stock in her custodial account in 2019.  21st Century fox was acquired by Disney, this merger generated a gain of under $6 in her account. The transaction is reported on a Form 1099-B Proceeds From Brokerage and Barter Exchange Transactions.  She has no other income, earned or otherwise.  I'm not sure if I still have to file a tax return for her, since this is classified as a capital gain, and not interest/dividends?

Would really appreciate any advice.  Thanks!

[macuser_22]

Ignore it.  That is way under the $1,100 unearned income filing requirement.

[KarenM90]

A return for a dependent is only required if the total of her unearned income is more than $1,100 for 2019, you need to file a return even if it is not required by your earned income.

Unearned income covers all other earnings, such as taxable interest, dividends, and capital gains that aren't the result of performing services.

[tomvat]

Thank you.  I'm guessing it doesn't matter whether its a short or long term capital gain, it is all considered unearned income?  

[macuser_22]

---

@tomvat wrote:

Thank you.  I'm guessing it doesn't matter whether its a short or long term capital gain, it is all considered unearned income?  

---

Yes.

[MaryK4]

Yes, it is unearned income regardless of if it is long or short term.

@tomvat

[tomvat]

Thank you.  Another thing that confuses me is the IRS's definition of unearned income:

Unearned Income

Unearned income includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions.

It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust.

This information is found in the Filing Information chapter of Publication 17, Your Federal Income Tax.

I thought capital gains distributions are what a mutual fund pays, not the result of a stock transaction resulting in a gain.  Are capital gains from a stock exchange/sale and capital gains distributions considered the same thing by the IRS?

[macuser_22]

---

@tomvat wrote:

I thought capital gains distributions are what a mutual fund pays, not the result of a stock transaction resulting in a gain.  Are capital gains from a stock exchange/sale and capital gains distributions considered the same thing by the IRS?

---

Yes.

A capital gain is any income received from selling a security at a higher price than purchased.   Mutual funds can pay both interest earned, and/or capital gains when  the fund sells the securities that it holds.

Basically "unearned" income is any income not earned from working (with a few exceptions).