Detailed Answer
(b) The requirement is to determine which of the relatives
can be claimed as a dependent (or dependents) on Sam’s
2012 return. A taxpayer’s own spouse is never a dependent of the
taxpayer. Although a personal exemption is generally available
for a taxpayer’s spouse on the taxpayer’s return, it is not a “dependency
exemption.” Generally, a dependency exemption is
available for a qualifying relative if (1) the taxpayer furnishes
more than 50% of the dependent’s support, (2) the dependent’s
gross income is less than $3,800, (3) the dependent is of specified
relationship to the taxpayer or lives in the taxpayer’s household
for the entire year, (4) the dependent is a US citizen or resident
of the US, Canada, or Mexico, and (5) the dependent does not
file a joint return. Here, the support, gross income, US citizen,
and joint return tests are met with respect to both Sam’s cousin
and his father’s brother (i.e., Sam’s uncle). However, Sam’s
cousin is not of specified relationship to Sam as defined in the
IRC, and could only be claimed as a dependent if the cousin lived
in Sam’s household for the entire year. Since Sam’s cousin did
not live in Sam’s household, Sam cannot claim a dependency
exemption for his cousin. On the other hand, Sam’s uncle is of
specified relationship to Sam as defined in the IRC and can be
claimed as a dependency exemption by Sam.