It would only be included if the dependent had enough "taxable income" that would require him to file a tax return (so other things that require him to file, such as for SE tax, would not trigger it).

And in my opinion, even if his income was a bit over the filing requirement, a contribution to a Traditional IRA (to reduce his "taxable income" to $0) would eliminate the need for the income to be included (despite the way the Instructions phrase it - the Code reads differently than the Instructions).