We report calculations of the optical and magneto-optical properties of GdFe(2) and GdCo(2) using the full-potential linear-augmented-plane-wave method. Calculations with the Coulomb corrected local spin density approximation (LSDA+U) give a better representation of the band structure, density of states and magnetic moments compared to LSDA alone. However, both LSDA and LSDA+U approximations give fairly good agreement with experiment for the diagonal optical conductivity. The calculated results for GdCo(2) are in better agreement with the 'oxide corrected' data. Our results suggest that the data for GdFe(2) are most likely influenced by surface oxidation, due to the high reactivity of these compounds. For the much smaller off-diagonal components and Kerr rotation, LSDA results are better than the LSDA+U results, particularly in the energy range 0-3 eV. We show that the unphysical negative ellipticity values are taken care of by the use of stronger relaxation, which also improves the qualitative agreement with experimental data. Overall we have obtained a fair agreement with the experimental data for both optical and magneto-optical properties. We feel that measurements over a larger energy range are required for facilitating an exhaustive and decisive comparison and also to strengthen the bond between theory and experiments.