? Required to file: 12 yr old receives proceeds $890 from cow sales

[Barb]

I have a 12 yr old that has received $890 from the sale of cows that her grandpa sold in her name. She also has $135 in interest. Is she required to file?

[Jiggers]

Not so smart grandpa

I have a 12 yr old that has received $890 from the sale of cows that her grandpa sold in her name. She also has $135 in interest. Is she required to file?

The grandpa was probably trying to avoid taxes on the sale of the cow.

He wrote off all the expenses for raising this cow and should have reported the sale.

I would say that the child has a gift from the grandpa. Basis is zero, probably.

Sold a capital asset, goes on Schedule D.

I encounter this all the time. If I catch the grandpa doing this when I am doing this return, and I have, I report the sale on the grandpa's return. They leave the livestock commission sales documents in their tax information.

Maybe they sold it in the grandchild's name, maybe they kept the money!

[winnie]

cows

Hey - don't be so hard on grampa. I grew up on a farm and the only money we ever saw was when my dad would let us have a calf at birth to raise until "veal" age. We would get a few hundred bucks and that was a very lot of money. The feed to raise that calf was so extremely insignificant in the scope of the farm, that it was never allocated. It all belonged to the child. So I say - way to go grampa!

I disagree. I think it is earned income and that the child is under the limit for filing. See page 3-12 in TTB for filing requirements. Would put it under other income in line 21.

But really -- you need to find out more details. Did grampa give her the cow the day before they sold it? Then I agree with the previous posting. Has this kid been taking care of the cow since it was born? Then it is her income.

[Barb]

She doesn't take of it

Grandpa just sells them in the kids names and yes, they do get the money and it is put into their bank accounts. I figure since it over $850 and they have over $100 of interest income then the kids need to do a 1040 and I report all the cow sales as other income. It makes them pay about $17. If it were all Interest then I could do the "kiddie tax, but it isn't.

[Y2KEA]

ASSUMING grandpa gifted the cows to girl immediately prior to sale & ASSUMING zero basis, girl then sold personal property at an ordinary gain of $890. I would call it line 21 income not subject to SE.

[Snaggletooth]

Earned Income

This brilliant move results in earned income for the kid. Complete with SE tax & all.

Like people posting above, I don't have all the facts, but I'm assuming the kid does chores around the barn and gets to sell one of the livestock for their work. Not a bad idea in my opinion -- rewards a patient work ethic. But for all good sense, grandpa should have sold the cow and given the money to the kid.