Making up stories is common in children, particularly when they are trying to avoid "getting into trouble." Parents need to use this type of story-telling as opportunities to teach their children how to admit to their mistakes and how to take responsibilities for their actions.With your daughter, this is not the case. You are right to be concerned. I would not simply put it down to "normal" behavior and wait for the "phase" to pass. As her mother, you should trust your instincts. Her "brilliance" together with her home situation could well be contributing to the behavior she is displaying. There is much you can do at this time to investigate the problem and help your daughter. If you haven't already done so, you should approach her school and request that she have a full psychological assessment. This will shed light not only on the extent of her smartness, but also on her emotional state. You can also, together with her teacher, investigate the specific situations which precipitate her story-telling. You may find some patterns.