Jayesh B. and Devsmita J. Patel - Page 4

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          semester tuition because they were going to be out of the country           
          when the tuition became due.                                                
               Petitioners timely filed their Form 1040, U.S. Individual              
          Income Tax Return, for taxable year 2002.  On their 2002 Federal            
          tax return, petitioners claimed a Lifetime Learning Credit for              
          Ms. Patel as the eligible student.  In calculating the Lifetime             
          Learning Credit for their 2002 Federal tax return, petitioners              
          added the above-mentioned amounts of qualified education expenses           
          along with other miscellaneous education expenses, resulting in a           
          total amount for qualified education expenses of $7,600.                    
          Petitioners then used Form 8863, Education Credits (Hope and                
          Lifetime Learning Credits), to calculate their claimed education            
          credit of $1,000 for taxable year 2002.                                     
               Subsequently, respondent issued a notice of deficiency to              
          petitioners in which respondent disallowed $250 of petitioners’             
          claimed $1,000 education credit.  In other words, respondent                
          allowed petitioners an education credit for taxable year 2002 of            
          $750.  Respondent contends that the partial disallowance of                 
          petitioners’ claimed education credit is correct because the                
          prepayment of the 2002 spring semester tuition of $3,611 is                 
          properly taken into account on petitioners’ 2001 Federal tax                

          January or February of taxable year 2002.                                   

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