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On their 2001 Federal income tax return, petitioners claimed
dependency exemption deductions, inter alia, for three of
petitioner’s children from his marriage to Loretta and child tax
credits for two of those children. Loretta also claimed
dependency exemption deductions for the three children.
Respondent disallowed the dependency exemption deductions and the
child tax credits claimed by petitioners.
Discussion
1. Dependency Exemptions
Sections 151 and 152 provide that a taxpayer is entitled to
deduct an exemption for a dependent if the taxpayer provides over
half of the support for the dependent. The pre-1985 version of
the dependency exemption deduction as it applied to the children
of divorced or separated parents was “often subjective and
[presented] difficult problems of proof and substantiation”. H.
Rept. 98-432 (Part II), at 1498 (1984). In order to provide more
certainty, Congress amended section 152(e) to “[allow] the
custodial spouse the exemption unless that spouse waives his or
her right to claim the exemption. Thus, dependency disputes
between parents will be resolved without the involvement of the
Internal Revenue Service.” Id. at 1499.
Under section 152(e)(1), in the case of a minor dependent
whose parents are divorced or separated and together provide over
half of the support for the minor dependent, the parent having
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Last modified: May 25, 2011