Clifford Thomas and Leah Diane Noah - Page 4

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          to Laurie and Andrew in the amounts of $4,700 and $4,900 for the            
          1993 and 1994 tax years, respectively.                                      
               Respondent disallowed, in full, petitioners' claimed                   
          dependency exemption deductions with respect to Laurie and Andrew           
          for the 1993 and 1994 tax years.  Respondent also disallowed $13            
          of petitioners' claimed child-care credit for the 1993 tax year.            
               Respondent contends that petitioners were not entitled to              
          claim section 151 dependency exemption deductions for Laurie and            
          Andrew because petitioner was not the custodial parent and did              
          not meet the statutory exceptions of section 152(e).                        
          Discussion                                                                  
          Dependency Exemption Deductions                                             
               Section 151 allows a taxpayer to deduct an exemption amount            
          for each dependent as defined in section 152.  The term                     
          "dependent" includes a taxpayer's son or daughter over half of              
          whose support for the calendar year is received from the                    
          taxpayer.  Sec. 152(a)(1).  Section 152(e), in pertinent part,              
          provides for the allocation of a dependency exemption deduction             
          for a child whose parents are divorced.  Section 152(e) was                 
          amended by the Deficit Reduction Act of 1984, Pub. L. 98-369,               
          sec. 423(a), 98 Stat. 799.  Section 152(e), as amended, is                  
          effective with respect to dependency exemption deductions for               
          taxable years beginning after December 31, 1984.  Sec. 1.152-4T,            
          Temporary Income Tax Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984).             






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