Title: To amend the Internal Revenue Code of 1986 to treat certain scholarships and fellowship grants as earned income for purposes of the kiddie tax.
Policy area: Taxation

Summary:
This bill treats certain scholarship or fellowship grants received by children as earned income of the child for the purposes of the kiddie tax (the tax on the unearned income of children). This has the effect of exempting the grants from such tax. The bill applies to taxable years beginning after December 31, 2017.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2806 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 2806

      To amend the Internal Revenue Code of 1986 to treat certain 
scholarships and fellowship grants as earned income for purposes of the 
                              kiddie tax.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 16, 2019

 Mr. Horsford 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 treat certain 
scholarships and fellowship grants as earned income for purposes of the 
                              kiddie tax.

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

SECTION 1. CERTAIN SCHOLARSHIPS AND FELLOWSHIP GRANTS TREATED AS EARNED 
              INCOME FOR KIDDIE TAX.

    (a) In General.--Section 1(g)(4)(C) of the Internal Revenue Code of 
1986 is amended to read as follows:
                    ``(C) Treatment of certain amounts as earned 
                income.--For purposes of this subsection, each of 
                following amounts shall be treated as earned income of 
                the child referred to in paragraph (1) to the extent 
                included in the gross income of such child:
                            ``(i) Distributions from qualified 
                        disability trusts.--Any amount included in the 
                        gross income of such child under section 652 or 
                        662 by reason of being a beneficiary of a 
                        qualified disability trust (as defined in 
                        section 642(b)(2)(C)(ii)).
                            ``(ii) Certain scholarships or fellowship 
                        grants.--Any scholarship or fellowship grant 
                        which is received by such child if--
                                    ``(I) such child is a candidate for 
                                a degree at an educational organization 
                                described in section 170(b)(1)(A)(ii), 
                                and
                                    ``(II) such scholarship or grant 
                                supports such candidacy.''.
    (b) Application to Alternative Minimum Tax.--Section 59(j)(1)(A) of 
such Code is amended by inserting ``and including amounts treated as 
earned income under section 1(g)(4)(C)'' after ``section 911(d)(2)''.
    (c) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2017.
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