Support Concerning a Qualified Child

[Dan]

Question:  If the parents buy a car for their child for $4500 and the car is titled in the child's name who is a full-time student, can the parents include that as a part of parents support in figuring whether they can claim the child as a dependent? 

[Margaret CPA in OH]

Transportation is included in support so I would include it.  I think.

[Pacun]

Sounds funny but what was the intent?

So, I am a student and for my birth day, I get a car. That's not support, that's a gift. 

To make it more interesting, once it is clear it is a gift, I can use the car for transportation and that will count of my contribution to my support.

Let me add another twist, you cannot use $4,500 for this year but rather they have to use the depreciation portion for that year.  Better yet, ask for the logs and use the mileage. 

[DANRVAN]

3 hours ago, Pacun said:

So, I am a student and for my birth day, I get a car. That's not support, that's a gift. 

per Rev. Rul. 77-282, 1977-2 CB 52, IRC Sec(s). 152,  "If the parent had purchased the automobile as a gift for the youth and registered title in the youth's name, the parent thereby would have provided support, and the support so provided would likewise be measured by the fair market value of the automobile and would be included in support for the year of the gift."

[Pacun]

Good to know and good planning tool. So, each December 31st buy a Mercedes, gift it to the student under 24, register it under his name, use the unified credit and you can claim him.