Interest and Dividends     
1.  Enter any amount from Form 1040, line 8a  1.  
2.  Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line
1b  2.  
3.  Enter any amount from Form 1040, line 9a  3.  
4.  Enter the amount from Form 1040, line 21, that is from Form 8814 if you are filing that form to report your child's interest and dividend income on your return. (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line.)
 4.  
Capital Gain Net Income     
5.  Enter the amount from Form 1040, line 13. If the amount on that line is a loss, enter
0  5.    
6.  Enter any gain from Form 4797, Sales of Business Property, line 7. If the amount on that line is a loss, enter 0. (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead.)
 6.    
7.  Subtract line 6 of this worksheet from line 5 of this worksheet. (If the result is less than zero, enter
0.)  7.  
Royalties and Rental Income From Personal Property     
8.  Enter any royalty income from Schedule E, line 23b, plus any income from the rental of personal property shown on Form 1040, line 21
 8.    
9.  Enter any expenses from Schedule E, line 20, related to royalty income, plus any expenses from the rental of personal property deducted on Form 1040, line 36
 9.    
10.  Subtract the amount on line 9 of this worksheet from the amount on line 8. (If the result is less than zero, enter
0.)  10.  
Passive Activities     
11.  Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. (g)), 34a (col. (d)), or 40; or an ordinary gain identified as "FPA" on Form 4797, line 10). (See instructions below for lines 11 and 12.)
 11.    
12.  Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. (f)), 34b (col. (c)), or 40; or an ordinary loss identified as "PAL" on Form 4797, line 10). (See instructions below for lines 11 and 12.)
 12.    
13.  Combine the amounts on lines 11 and 12 of this worksheet. (If the result is less than zero, enter
0.)  13.  
14.  Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Enter the total.
This is your investment income  14.  
15.  Is the amount on line 14 more than
$3,450? □
Yes. You can’t take the credit. □
No. Go to
Step 3
of the Form 1040 instructions for lines 66a and 66b to find out if you can take
the credit (unless you are using this publication to find out if you can take
the credit; in that case, go to
Rule 7, next).
  

Instructions for lines 11 and 12.
In figuring the amount to enter on lines 11 and 12, don’t take into
account any royalty income (or loss) included on line 26 of Schedule E or any
income (or loss) included in your earned income or on line 1, 2, 3, 4, 7, or 10
of this worksheet. To find out if the income on line 26 or line 40 of Schedule E
is from a passive activity, see the Schedule E instructions. If any of the
rental real estate income (or loss) included on Schedule E, line 26, isn’t
from a passive activity, print "NPA" and the amount of that income (or loss) on
the dotted line next to line 26.
