Princess Stephan Obriot - Page 5




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               Petitioner claimed the earned income credit in 1995 and 1996           
          based on having a qualifying child, her daughter Ayla.                      
          Petitioner claimed head of household filing status in 1996.                 
          Respondent does not contend that Ayla is not a qualifying child             
          with respect to petitioner.  Respondent disallowed the earned               
          income credit because respondent contends that Ayla is a                    
          qualifying child with respect to the grandparents, who have a               
          higher modified adjusted gross income than petitioner.                      
          Respondent also determined that petitioner's filing status was              
          single.                                                                     
               Section 32 provides that an eligible individual is allowed a           
          credit calculated as a percentage of the individual’s earned                
          income.  An eligible individual includes an individual with a               
          qualifying child.  Sec. 32(c)(1).  However, if two or more                  
          individuals would be treated as eligible individuals with respect           
          to the same qualifying child for taxable years beginning in the             
          same calendar year, only the individual with the highest modified           
          adjusted gross income for such taxable years shall be treated as            
          an eligible individual with respect to such qualifying child.               
          Sec. 32(c)(1)(C).                                                           
               In 1995 and 1996, the years in issue, the definition of                
          "qualifying child" under section 32(c)(3) was the same definition           
          originally enacted on November 5, 1990, in the Omnibus Budget               
          Reconciliation Act of 1990 (1990 Act), Pub. L. 101-508, sec.                





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