We have two clients with tax issues that I have summarized below. Please research these issues and respond to me with a memo by February 17. Issue #1 Our clients Fred and Sarah Thompson were divorced in December 2019. During their marriage, they had two children, Aaron and Lisa. At the time of the divorce, the children were ages 13 and 12, respectively. The divorce decree provides for joint custody of the children. Specifically, Fred and Sarah are to have the children in alternating weeks. Both Fred and Sarah are professionals with relatively high incomes (approximately $200k each), so the divorce decree doesnt provide for child support. It also does not stipulate which parent is to claim the children for child tax credit purposes. During 2019, Fred and Sarah tried to alternate custody to the best of their ability. Work issues, however, caused a great deal of trading to take place. Fred kept the children for two weeks while Sarah was out of town on business during her custody week. Sarah would return the favor by keeping the children during one of Freds weeks. Unfortunately, neither parent kept any records, so its impossible to determine who had the most custody. Sarah feels that she had custody half of the year. Fred tends to agree as to Lisa, but disagrees as to Aaron. Fred recalls that he took Aaron walleye fishing during one of Sarahs custody weeks. It looks like the two of them contributed equally to the childrens support. Neither parent has or will sign a Form 8332. Which parent is entitled to claim the child tax credit for Aaron and Lisa? Issue #2 Fred is an insurance agent who receives a commission on each policy he sells. During 2019, he purchased a policy on his own life, naming his wife, Sarah as the beneficiary. He did not report the commission on the policy as gross income because he considered the commission a reduction in his cost (like a discount) for the life insurance. The Thompsons 2019 joint return is being audited and the agent is challenging the exclusion. Is the agent correct, or is the position taken by our client correct? Provide citations to all relevant authority. Ill need that for my meeting with the auditor.