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an amount in cash equal to just under 50 percent of total
household income in 1995 and just over 50 percent in 1996. He
also contributed the use of his car, the fair market value of
which must be taken into account. Sec. 1.152-1(a)(2)(i), Income
Tax Regs. Finally, petitioner provided corroborating evidence of
his payment of expenses for the children. We find from the
testimony and other evidence that petitioner used his available
cash and property in providing over half of the support for the
children in each of the years in issue. Petitioner is entitled
to the disallowed dependency exemption deductions.
We need not address whether petitioner is entitled to head
of household filing status: with the dependency exemption
deductions, petitioner had zero taxable income and zero tax
liability in each year with or without head of household filing
status.
Under section 32,1 an eligible individual is allowed a
credit which is calculated as a percentage of the individual’s
earned income. Sec. 32(a)(1). Any taxpayer with a qualifying
child is an eligible individual. Sec. 32(c)(1). Taxpayers with
two or more qualifying children are entitled to a larger credit
1We apply sec. 32 as it was in effect in the years in issue,
except sec. 32(c)(3), which was modified retroactively to taxable
years beginning after 1990 by the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 6021,
112 Stat. 823.
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Last modified: May 25, 2011