Tax Internal Research Memo

Topics: Taxation in the United States, Internal Revenue Service, Tax Pages: 4 (1132 words) Published: September 28, 2014
Date: September 12, 2014
Preparer: ABC
Reviewer: Jack
Client: Ann
RE: Dependency Exemption
Facts: Ann and Jeff Burns divorced in 2011 when their daughter Kim was three and Ann filed an agreement that allowed Jeff to take a dependency exemption for Kim as long as he continued to provide child support payments. Last year Ann wished to take the dependency exemption for two reasons. First, she has provided more than half of the cost of raising Kim. Second, the agreement should be invalid because she signed it under duress. Issues: (1) Does providing over one-half of the support entitle Ann to claim a child as a dependent? (2) Is an agreement that allows Jeff to take the dependency exemption still valid if the agreement was signed by Ann when she was under duress? Conclusions: (1) Although providing over one-half of the support, with the written declaration that Ann will not claim the child as a dependent, Ann is not entitled to claim Kim as her dependent. (2) Ann is not entitled to take a dependency exemption for the child because a written agreement would be considered valid even if signed under duress. Analysis:IRC Sec. 152(e)(1) provide that a child must receives over one-half of the child's support during the calendar year from the child's parents in order to be a qualifying child when child's parents are divorced. IRC Sec. 152(e)(2)(A) then indicates exception that if the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent, the child shall be treated as being the qualifying child of the noncustodial parent.

Reg Sec. 1.152-4T(a)(3) states that noncustodial parent may claim the exemption for a dependent child when a written declaration from the custodial parent stating that he/she will not claim the child as a dependent for the taxable year beginning in such calendar year is attached o...
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