I don't believe the law is different. Sections 152 and 7701 remain the
same. What changed is that the IRS position, which has been blindly
followed by much of the tax professional community, has come into
compliance with the rules of statutory construction and the tendancy
of the Tax Court to read the law as written. I have defied the
previous IRS position since 2005 with full disclosure, hoping for a
legal challenge to no avail. The definition of "taxpayer" seemed
rather clear to me. I have lots of clients supporting their non-filing
girlfriends with children who were told by other tax professionals
they could not claim dependent exemptions. This is yet another reason
to learn how to read statutes instead of relying on secondary sources,
a method I learned early on in my practice not from another attorney,
but from Ed Zollars, CPA. I still remain grateful to him for that
insight.

Timothy E Kelly
Attorney at Law
Certified Specialist in Taxation law
State Bar of California
Board of Legal Specialization

In article <iRS9j.25049$4V6.6695[at]newssvr14.news.prodigy.net> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:
- quote -



I agree this goes a long way to resolving that issue, and I'm
glad to see it.



It does not help in the two sibling case where, let's say, each
sibling has capital gains income from sale of stock of, say, $950.

Since each sibling must file a tax return to pay tax, we are
back where we started. Even worse, we know we cannot go the
Qual Relative route.

- quote -


--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

A must read for all is IRS Notice 2008-05
(http://www.irs.gov/pub/irs-drop/n-08-05.pdf).

It basically makes a change on who is a qualifying child of
another taxpayer. A taxpayer can not claim a person as a
qualifying relative if the person is a qualifying child of
another taxpayer. The definition of taxpayer was quite broad and
included anyone subject to US tax law. This had the effect of
denying dependency exemptions to individuals who completely cared
for children who failed the qualifying relative test because they
were the qualifying children of their parent even if the parent
did not file a tax return. It also eliminated the dependency
exemption for those who cared for unrelated children who were
siblings as they were a qualifying child of each other.

This notice fixes that by allowing one to treat those children as
qualifying relatives (assumes all the other QR tests are met) as
long as the parent or anyone with respect to whom the child is
defined as a qualifying child, is not required to file a tax
return and does not file an income tax return or merely files to
obtain a refund of taxes withheld. The notice has examples.