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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
1(...continued)
January or February of taxable year 2002.
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Last modified: May 25, 2011