I 

108TH CONGRESS 

2D SESSION H. R. 4135 

To amend the Internal Revenue Code of 1986 to simplify the taxation of 

minor children. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 2, 2004 

Mr. HOUGHTON introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to simplify 

the taxation of minor children. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as ‘‘Taxation of Minor Chil5 dren Simplifcation Act of 2004’’. 

6 SEC. 2. TAXATION OF MINOR CHILDREN. 

7 (a) APPLICATION OF TRUST RATE SCHEDULE TO

8 NET UNEARNED INCOME OF MINOR CHILDREN.—Sub9 section (g) of section 1 of the Internal Revenue Code of 
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1 1986 (relating to certain unearned income of minor chil2 dren taxed as if parent’s income) is amended— 

3 (1) by striking paragraphs (1), (3), and (5), 

4 (2) by redesignating paragraphs (4), (6), and 

5 (7) as paragraphs (3), (4), and (5), respectively, and 

6 (3) by inserting before paragraph (2) the fol7 lowing new paragraph: 

8 ‘‘(1) IN GENERAL.—In the case of a child to 

9 whom this subsection applies, the tax imposed by 

10 this section shall be the sum of— 

11 ‘‘(A) a tax computed at the rates and in 

12 the same manner as if this subsection had not 

13 been enacted on taxable income reduced by net 

14 unearned income, plus 

15 ‘‘(B) the excess (if any) of the tax deter16 mined under subsection (e) on total taxable in17 come over the tax determined under subsection 

18 (e) on taxable income reduced by net unearned 

19 income.’’. 

20 (b) EXPANSION OF PARENTAL ELECTION.—Para21 graph (5) of section 1(g) of such Code (as redesignated 

22 under subsection (a)) is amended to read as follows: 

23 ‘‘(5) ELECTION TO CLAIM INCOME OF CHILD ON

24 PARENT’S RETURN.— 
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1 ‘‘(A) IN GENERAL.—If the parent of any 

2 child to whom this subsection applies elects the 

3 application of subparagraph (B), such child— 

4 ‘‘(i) shall be treated (other than for 

5 purposes of this paragraph)— 

6 ‘‘(I) as having no gross income 

7 for such year, and 

8 ‘‘(II) as not being entitled to any 

9 deductions or credits for such year, 

10 and 

11 ‘‘(ii) shall not be required to file a re12 turn under section 6012 for such year. 

13 ‘‘(B) INCOME INCLUDED ON PARENT’S RE14 TURN.—In the case of a parent making the 

15 election under this paragraph— 

16 ‘‘(i) the gross income of each child to 

17 whom such election applies shall be in18 cluded in such parent’s gross income for 

19 the taxable year, 

20 ‘‘(ii) the deductions to which such 

21 child would be entitled without regard to 

22 such election shall be allowed to such par23 ent but only to the extent the aggregate of 

24 such deductions does not exceed the gross 

25 income of such child, 
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1 ‘‘(iii) any estimated tax payment, and 

2 any amount which has been deducted and 

3 withheld under chapter 24, for such year 

4 that is made in the name and TIN of such 

5 child shall be treated as an estimated tax 

6 payment or as an amount deducted and 

7 withheld in the name and TIN of such par8 ent for such year (including for purposes 

9 of section 31), and 

10 ‘‘(iv) any interest which is an item of 

11 tax preference under section 57(a)(5) of 

12 the child shall be treated as an item of tax 

13 preference of such parent (and not of such 

14 child). 

15 ‘‘(C) SPECIAL RULE FOR DETERMINING

16 WHICH PARENT MAY MAKE ELECTION.—For 

17 purposes of this paragraph, the parent of a 

18 child to whom this subsection applies who may 

19 make an election under this paragraph shall 

20 be— 

21 ‘‘(i) in the case of parents who are not 

22 married (within the meaning of section 

23 7703), the custodial parent (within the 

24 meaning of section 152(e)) of the child, 

25 and 
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1 ‘‘(ii) in the case of married individuals 

2 filing separately, the individual with the 

3 greater taxable income. 

4 ‘‘(D) CARRYOVERS ALLOWED.—Subpara5 graph (A)(i)(II) shall not prohibit the carryover 

6 of any amount that the child would be entitled 

7 to carryover without regard to the election 

8 under this paragraph. 

9 ‘‘(E) REGULATIONS.—The Secretary shall 

10 prescribe such regulations as may be necessary 

11 or appropriate to carry out the purposes of this 

12 paragraph.’’. 

13 (c) CONFORMING AMENDMENT.—The heading for 

14 subsection (g) of section 1 of such Code is amended to 

15 read as follows: 

16 ‘‘(g) TREATMENT OF CERTAIN INCOME OF MINOR

17 CHILDREN.—’’. 

18 (d) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years beginning after 

20 December 31, 2004. 

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