Well, GoNoles, winning a scholarship has nothing to do with a parent transferring assets to a child to avoid tax at a higher rate, but the kiddie tax could apply because the tax code says it can.
I agree the kiddie tax doesn’t apply to prizes won by a child, but only because the tax codes doesn’t subject the award to the kiddie tax. If the exact same award was presented as a scholarship and not cash, like the Miss America pageant awards its prizes, then all the rules about scholarships apply, and if the scholarship becomes income, the kiddie tax could kick in.
The article posted by AttorneyMother in #61 from 2011 makes sense to me. I hope the OP reads that article especially page two. The kiddie tax does not apply to “earned income” earned by the child. The kiddie tax could kick in if the child receives a scholarship that is taxable (which is unearned income) but, as the article says on page 2, winning an award is earned income thus even though the income is taxed at the child’s marginal tax rate, on the child’s tax return, (if the child has enough income to file) it will not be taxed at the parent’s marginal tax rate.
And since winning the award is “earned” income by the child the child has to file and pay self employment (SE) taxes and as the article says that is no big deal.
Bottom line: the award is income to the child. No problem. It is not income to the parent. The OP could figure out how to report the award won in a music competition without hiring anyone and save $250 or whatever the CPA charges you. But, if you want to feel more comfortable hire an accountant or EA or CPA.
^^I said this waaaay back in Post #7 (self-employment income).
With that, I’m closing the thread. I thing everything that can be said has been said, and it is unlikely that any new points will add additional texture to the conversation.