John B. Anderson - Page 4

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                                                                           Discussion                                                                                      
                              The Internal Revenue Code allows as a deduction an exemption                                                                                 
                    for each dependent of a taxpayer in computing taxable income.                                                                                          
                    Sec. 151(c).  A child of a taxpayer is generally a qualified                                                                                           
                    dependent only if the taxpayer provides over half of the child’s                                                                                       
                    support during the taxable year.  Sec. 152(a)(1).  However,                                                                                            
                    section 152(e)(1) limits the dependency exemption where the                                                                                            
                    child’s parents live apart, as follows:                                                                                                                
                                        SEC. 152(e).  Support Test in Case of Child of                                                                                     
                              Divorced Parents, Etc.–-                                                                                                                     
                                                  (1) Custodial parent gets exemption.–-Except                                                                             
                                        as otherwise provided in this subsection, if--                                                                                     
                                                            (A) a child (as defined in section                                                                             
                                                  151(c)(3)) receives over half of his support                                                                             
                                                  during the calendar year from his parents--                                                                              
                                                                      (i) who are divorced or legally                                                                      
                                                            separated under a decree of divorce or                                                                         
                                                            separate maintenance,                                                                                          
                                                                      (ii) who are separated under a                                                                       
                                                            written separation agreement, or                                                                               
                                                                      (iii) who live apart at all times                                                                    
                                                            during the last 6 months of the calendar                                                                       
                                                            year, and                                                                                                      
                                                            (B) such child is in the custody of one                                                                        
                                                  or both of his parents for more than one-half                                                                            
                                                  of the calendar year,                                                                                                    
                                        such child shall be treated, for purposes of                                                                                       
                                        subsection (a), as receiving over half of his                                                                                      
                                        support during the calendar year from the parent                                                                                   
                                        having custody for a greater portion of the                                                                                        
                                        calendar year (hereinafter in this subsection                                                                                      
                                        referred to as the “custodial parent”).                                                                                            






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