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Scenario $5$: Kiddie Tax

Thomas and Jessica's child $($age $15)$ has the following unearned income:

Interest and Dividends: $$3,500$

Capital Gains Distributions: $$1,000$

Parents$$ taxable income puts them in the top tax bracket.

Calculate:

The potential tax liability on the child's income under the Kiddie Tax rules.

Discuss the purpose of the Kiddie Tax.