Tax Memorandum

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September 30, 2012 Mr. Don Dewey 4321 Mount Vernon Road Dover, DE 19901 Dear Mr. Dewey: This letter is in response to your inquiry regarding the benefits and feasibility of allowing your daughter to be classified as a qualified child of your eldest son for this tax year. My conclusion is based upon the facts as provided by you at the Chamber of Commerce meeting on Wednesday, September 26, 2012. FACTS You are legally married to Mary Dewey and reside in the same abode. Both you and Mary file your income tax returns jointly as married. You and Mary are anticipating an approximate Adjusted Gross Income (AGI) of $400,000 this year. In your same abode, you have two children in residence; Debra, who is currently 16 years of…show more content…
This is not the case where Van has a significantly smaller AGI than his parents, the Dewey’s. This position was affirmed by H.R. 6893, that when parents may claim a qualifying child but do not and another taxpayer may claim the qualifying child, that can only occur if that taxpayer’s adjusted gross income is higher than the highest adjusted gross income of either of the child’s parents. In summary, Van, doesn't qualify for head-of-household status on the basis of an individual who is a taxpayer's dependent solely under §152(d)(2)(H), which, under certain circumstances, treats as a dependent any individual other than the taxpayer's spouse whose principal place of abode was the taxpayer's home and who was a member of the taxpayer's household (¶1230). Van Dewey is not the owner of the household, and it would be unethical to have him claim Debra Dewey as a dependent. REFERENCES Code Sec. 2(b)(3)(B)(i) Code Sec. 24(b)(1) - (2)(A) Code Sec. 32(c)(3) Code Sec. 151(c) Code Sec. 152(c)(4)(C)-(d)(2)(H) Rev. Rul. 84-89, 1984-1 CB 5 Beale, Randolph John, (2000) TC Memo 2000-158, RIA TC Memo ¶2000-158, 79 CCH TCM 2001 Butler, Timothy E., (1998) TC Memo 1998-355, RIA TC Memo ¶98355, 76 CCH TCM 601 H.R. 6893: CONGRESSIONAL RECORD, Vol. 154 (2008): Sept. 17, considered and passed House. Sept. 22, considered and passed

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