The overall law had a good reason, to keep parents from transferring appreciating assets to their children (who wouldn't have any other income), in order to les

The overall law had a good reason, to keep parents from transferring appreciating assets to their children (who wouldn't have any other income), in order to lessen the tax burden of those assets. So the tax code references any unearned income. It just isn't logical for most people to know that their unemployment income is also unearned income, and that you could be underpaying your taxes even after filling out the 1040 completely (and following the instructions in the 1040 instruction book). Maybe this case is called out specifically, it doesn't apply to me so I haven't looked for it in the instructions, however it was just something that I ran across that made me scratch my head.