LO.4 For the six years prior to his death in late 2010, Jesse lived with his daughter, Hannah. Because he had no source of income, Jesse was supported by equal contributions from Hannah and his two sons, Bill and Bob. At Jesse’s funeral, his surviving children are amazed to discover that none of them has been claiming Jesse as a dependent. Upon the advice of the director of the funeral home, they decide to divide, among themselves, the dependency exemptions for the past six years. Multiple Forms 2120 are executed, and each of the three children files amended returns for different past years. As Jesse died before the end of the current year, no deduction is planned for 2010.

Comment on the tax expectations of the parties involved.

CRITICAL THINKING