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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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