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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as ‘‘Taxation of Minor Chil-
dren Simplifcation Act of 2004’’. 
SEC. 2. TAXATION OF MINOR CHILDREN. 
(a) APPLICATION OF TRUST RATE SCHEDULE TO 
NET UNEARNED INCOME OF MINOR CHILDREN.—Sub-
section (g) of section 1 of the Internal Revenue Code of
1986 (relating to certain unearned income of minor chil-
dren taxed as if parent’s income) is amended— 
(1) by striking paragraphs (1), (3), and (5), 
(2) by redesignating paragraphs (4), (6), and 
(7) as paragraphs (3), (4), and (5), respectively, and 
(3) by inserting before paragraph (2) the fol-
lowing new paragraph: 
‘‘(1) IN GENERAL.—In the case of a child to 
whom this subsection applies, the tax imposed by 
this section shall be the sum of— 
‘‘(A) a tax computed at the rates and in 
the same manner as if this subsection had not 
been enacted on taxable income reduced by net 
unearned income, plus 
‘‘(B) the excess (if any) of the tax deter-
mined under subsection (e) on total taxable in-
come over the tax determined under subsection 
(e) on taxable income reduced by net unearned 
income.’’. 
(b) EXPANSION
OF PARENTAL ELECTION.—Para-
graph (5) of section 1(g) of such Code (as redesignated 
under subsection (a)) is amended to read as follows: 
‘‘(5) ELECTION TO CLAIM INCOME OF CHILD ON 
PARENT’S RETURN.—
‘‘(A) IN GENERAL.—If the parent of any 
child to whom this subsection applies elects the 
application of subparagraph (B), such child— 
‘‘(i) shall be treated (other than for 
purposes of this paragraph)— 
‘‘(I) as having no gross income 
for such year, and 
‘‘(II) as not being entitled to any 
deductions or credits for such year, 
and 
‘‘(ii) shall not be required to file a re-
turn under section 6012 for such year. 
‘‘(B) INCOME INCLUDED ON PARENT’S RE-
TURN.—In the case of a parent making the 
election under this paragraph— 
‘‘(i) the gross income of each child to 
whom such election applies shall be in-
cluded in such parent’s gross income for 
the taxable year, 
‘‘(ii) the deductions to which such 
child would be entitled without regard to 
such election shall be allowed to such par-
ent but only to the extent the aggregate of 
such deductions does not exceed the gross 
income of such child,
‘‘(iii) any estimated tax payment, and 
any amount which has been deducted and 
withheld under chapter 24, for such year 
that is made in the name and TIN of such 
child shall be treated as an estimated tax 
payment or as an amount deducted and 
withheld in the name and TIN of such par-
ent for such year (including for purposes 
of section 31), and 
‘‘(iv) any interest which is an item of 
tax preference under section 57(a)(5) of 
the child shall be treated as an item of tax 
preference of such parent (and not of such 
child). 
‘‘(C) SPECIAL
RULE
FOR
DETERMINING 
WHICH
PARENT
MAY
MAKE
ELECTION.—For 
purposes of this paragraph, the parent of a 
child to whom this subsection applies who may 
make an election under this paragraph shall 
be— 
‘‘(i) in the case of parents who are not 
married (within the meaning of section 
7703), the custodial parent (within the 
meaning of section 152(e)) of the child, 
and
‘‘(ii) in the case of married individuals 
filing separately, the individual with the 
greater taxable income. 
‘‘(D) CARRYOVERS
ALLOWED.—Subpara-
graph (A)(i)(II) shall not prohibit the carryover 
of any amount that the child would be entitled 
to carryover without regard to the election 
under this paragraph. 
‘‘(E) REGULATIONS.—The Secretary shall 
prescribe such regulations as may be necessary 
or appropriate to carry out the purposes of this 
paragraph.’’. 
(c) CONFORMING AMENDMENT.—The heading for 
subsection (g) of section 1 of such Code is amended to 
read as follows: 
‘‘(g) TREATMENT OF CERTAIN INCOME OF MINOR 
CHILDREN.—’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
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