Guadalupe Mares - Page 3




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               Petitioner’s 1996 Federal income tax return was prepared by            
          H&R Block.  The income reported on the return consists entirely             
          of the wages petitioner earned.  Petitioner claimed  dependency             
          exemption deductions for three siblings and her mother.  The                
          relationship of two of petitioner’s siblings is described as                
          “fosterchild” on the return.  Petitioner computed her 1996                  
          taxable income and Federal income tax liability taking into                 
          account the standard deduction applicable to a head of household.           
          She claimed an earned income credit computed by treating two of             
          her siblings (the ones identified as her foster children) as                
          qualifying children.                                                        
               In the notice of deficiency, respondent:  (1) Disallowed the           
          dependency exemption deductions for petitioner’s siblings and               
          mother; (2) changed petitioner’s filing status from head of                 
          household to single and adjusted the standard deduction                     
          accordingly; and (3) disallowed the earned income credit.                   
          Discussion                                                                  
          1. Dependency Exemption Deductions                                          
               Petitioner claimed dependency exemption deductions for three           
          of her siblings and her mother on her 1996 return.  Generally,              
          a taxpayer is entitled to an exemption deduction for each                   
          dependent.  Sec. 151(c).1  The term “dependent” includes a                  



               1 Unless otherwise indicated, section references are to the            
          Internal Revenue Code in effect for 1996.                                   





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