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because they did not include Ayla’s name, age, and taxpayer
identification number on their return. Sec. 32(c)(3)(D).
Petitioner satisfied this requirement.
Petitioner contends that she is entitled to the claimed
earned income credit because she complied with the tax laws as
they were in effect when she filed her income tax returns for the
years in issue. However, because the RRA 1998 amendment to
section 32(c)(3) applies retroactively, Ayla, who satisfied the
relationship test, the residency test, and the age test with
respect to the grandparents, is a qualifying child of the
grandparents for tax years 1995 and 1996 under the statute as
amended. Both petitioner and the grandparents could be treated
as eligible individuals with respect to Ayla. Under section
32(c)(1)(C), the grandparents, whose modified adjusted gross
income in 1995 and 1996 was higher than petitioner's modified
adjusted gross income for the same years, would be treated as the
eligible individuals with respect to Ayla in 1995 and 1996.
Therefore, petitioner is not eligible for the earned income
credit based on a qualifying child. Because of the
identification requirement which remains in section 32(c)(3)(D),
the grandparents would not receive the credit either.
It is a well-established constitutional rule that Congress
may provide for the retroactive operation of income tax
legislation which it enacts, subject to various qualifications.
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Last modified: May 25, 2011