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A dependency exemption may be allowed as a deduction only if
the requirements of sections 151 and 152 are satisfied. If the
child is under the age of 19, and is a "dependent" within the
meaning of section 152, the exemption will be allowed. Sec.
151(c)(1)(B). "Dependent" includes, among other family members,
a daughter "over half whose support, for the calendar year in
which the taxable year of the taxpayer begins, was received from
the taxpayer". Sec. 152(a). Support is determined by taking
into account--
the amount of support received from the taxpayer as
compared to the entire amount of support which the
individual received from all sources, including support
which the individual himself supplied. The term
"support" includes food, shelter, clothing, medical and
dental care, education, and the like. * * * [Sec.
1.152-1(a)(2)(i), Income Tax Regs.]
Petitioner lived with his wife and two children during the
1991 tax year. During 1991, petitioner's two daughters were
under the age of 19. Petitioner's taxable income for 1991 was
approximately $40,000, and his wife's income was approximately
$2,200. We find that petitioner provided over half the support
for the two children. From the foregoing, we conclude that
petitioner is entitled to the dependency exemptions for the two
children claimed on the amended 1991 jointly filed Federal income
tax return.
Issue 4. Schedule C Expenses
In addition to his employment at Drink-A-Toast Co., during
1991, petitioner operated Smoluk, Dugan & Gaines, Inc. (SDG), an
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