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Unformatted text preview: ndent must be a citizen or resident of the United States or its contiguous countries. (See pp. 4-5 through 4-11.) 4-6 The term support deals with the concept of providing for one's basic well-being. It is clear that support is determined by reference to the amount of the expenditures on behalf of an individual, including amounts provided by the individual for his or her own support. Support includes expenditures for the following items: food, shelter, clothing, medical and dental care, education, and similar items. Transportation, telephone, utilities, child care, charitable contributions, medical insurance premiums, toys, gifts, and entertainment are also included. Examples of items that are not included are the cost of life insurance and boats and the value of services provided by the taxpayer claiming the exemption. (See Exhibit 4-1 and pp. 4-5 through 4-8.) A taxpayer claiming a dependency exemption must provide more than 50 percent of an individual's support. Each of the items in this question represents a special case. Athletic scholarships, like academic scholarships, are not included in support. In determining whether a taxpayer supports a scholarship recipient, the value of the scholarship is not considered. (See Example 4 and pp. 4-5 through 4-7.) Social Security survivors' benefits paid to an orphan are considered as provided by the orphan. Therefore, any taxpayer entitled to the exemption must show that he or she provided more than the support from other sources, including the social security benefits. (See Examples 5 and 6 and pp. 4-5 through 4-7.) Aid to dependent children (state welfare payments) provided by a state is considered as provided by the state. Accordingly, an individual claiming a dependency exemption for an eligible child must show that he or she provided more than all other contributors, including the state. (See p. 4-6.) A qualifying relative must have gross income, as defined in 61 of the Code, of less than the exemption amount to be eligible as a dependent. An exception is provided for a qualifying child. There is no absolute limit on such a child's gross income. Reminder: The three other tests must be met before an exemption may be claimed. For 2011, the exemption amount is $3,700. (See pp. 4-8 and 4-9.) a. b. No. F may not be claimed as a dependent since his gross income ($5,000) exceeds the $3,700 exemption amount for 2011. Yes. Since the Social Security benefits are generally not included in gross income, F now meets the gross income test. 4-7 4-8 4-9 (See p. 4-8.) Solutions to Problem Materials 4-3 4-10 A qualifying relative must be properly related to the taxpayer in order for the taxpayer to claim an exemption deduction. A daughter-in-law is a qualified relative and this relationship survives the divorce or the death of her spouse. a. b. c. d. e. f. Yes. Yes. A brother-in-law is a qualified relative. No. A husband's niece does not qualify, but Q's own brother's daughter would qualify. Yes. An uncle qualifies. No. A great-uncle does not qualify. Yes. Descendants of children qualify. (See pp. 4-8 through 4-9.) 4-11 a. b. No. L may not be claimed by her mother since K and L elected to file a joint return. L's mother could claim a dependency exemption for L if L and K filed separately or if the tax shown on K and L's return was zero. (See p. 4-9.) 4-12 Yes, but there is not have enough information to determine who it is. B lived in the same abode as her mothe...
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This note was uploaded on 02/05/2012 for the course ACCT 110 taught by Professor Smith during the Spring '11 term at Adrian College.
- Spring '11