Research Problem 2. Sophia Durbin maintains a household in which she, her son (Ryan), and her widowed mother-in-law (Isabella) live. Since 2011, she also has provided more than half of their support. Sophia’s husband, Karl, left for parts unknown in April 2011 and, except for one postcard, has not been heard from since. In the postcard (no return address included) that Sophia received in March 2012, Karl announced that he planned to claim both Ryan and Isabella as dependents on his own tax return.

Ryan (age 19 in December 2011) graduated from high school on May 6, 2011, and plans to start college in 2013. Until then, he is working as much as possible to save for college expenses. He earned $8,000 in 2011 and $17,000 in 2012. Isabella’s income is negligible and originates from nontaxable sources (e.g., Social Security benefits and interest on municipal bonds).

For tax year 2011, Sophia filed her Federal income tax return as married filing separately and claimed no exemptions for dependents. She has not yet filed for 2012. Being somewhat perplexed with her situation, she comes to you for advice in early March 2013.

a. Write a letter to Sophia Durbin addressing her concerns. She lives at 1310 Ash Street, Kearney, NE 68849.

b. Prepare a memo for your firm’s client files that lists and discusses the legal basis for the advice rendered.