Question

Problem 3-34 (LO. 3, 4)

Determine the number of personal and dependency exemptions in each of the following independent situations. No tax treaty provisions apply (for example, 1, 2, 3, and so on).

		Personal Exemptions	Dependency Exemptions
a.	Reginald, a U.S. citizen and resident, contributes 100% of the support of his parents, who are citizens of Canada and live there.
b.	Pablo, a U.S. citizen and resident, contributes 100% of the support of his parents, who are citizens of Panama. Pablo's father is a resident of Panama, and his mother is a legal resident of the United States.
c.	Gretchen, a U.S. citizen and resident, contributes 100% of the support of her parents who are U.S. citizens but are residents of Germany.

Answer 1

Solution: Determination of the number of personal and dependency exemptions:

(a) Reginald, a U.S. citizen and resident, contributes 100% of the support of his parents, who are citizens oof Canada and live there: Three. The parents qualify as dependents under the Mexico/Canada exception.

(b) Pablo, a U.S. citizen and resident, contributes 100% of the support of his parents, who are citizens of panama. Pablo's father is a resident of Panama, and his mother is a legal resident of the united states: Two. Pablo's father does not qualify as he is a citizen and a resident of Panama while his mother qualifies as the resident of the U.S.

(c) Gretchen, a U.S. citizen and resident, Contributes 100% of the support of her parents who are U.S. cicitizens but are residents of Germany: Three. The parents do qualify since they are U.S. citizens.