Rev. Rul. 65-34

Advice has been requested regarding the allowance of an exemption for a dependent who, although not required to file a return, has filed a joint return with his spouse for the purpose of obtaining a refund of income tax withheld from their wages, in view of the decision of the Tax Court in the case of Vonnie M. Hicks v. Commissioner , T.C. Memo. 1957-24.

Section 151(e)(2) of the Interal Revenue Code of 1954 provides that `No exemption shall be allowed * * * for any dependent who has made a joint return with his spouse under section 6013 for the taxable year beginning in the calendar year in which the taxable year of the taxpayer begins.'

Revenue Ruling 54-567, C.B. 1954-2, 108, establishes the principle that where individuals claimed as dependents are not required under section 51 of the Internal Revenue Code of 1939 (section 6012 of the 1954 Code) to file a return, but nevertheless do so in order to obtain a refund of tax withheld, for the purpose of section 25(b) of the 1939 Code (section 151 of the 1954 Code) that return will be regarded as a claim for refund rether than a return, with the result that the filing thereof will not result in the disallowance of the dependency exemption where it is otherwise allowable.

In the Hicks case, while determining that no assessment for the year 1946 in which the dependency exemptions involved therein were claimed could be made because of the expiration of the statute of limitations, the Tax Court took the position that for Form 1040, U.S. Individual Income Tax Return, to be treated as a claim for refund it must also be a return and, since the Form 1040 that was filed jointly was a return, neither of the persons filing it could be claimed as a dependent by a third party.

Since the Court's determination with respect to the statute of limitations effectively disposed of the dependency exemptions claimed for 1946, the Service considers the Court's position regarding the status of the return as dicta.

Therefore, the Service will not rely on the decision in the case of Vonnie M. Hicks v. Commissioner , T.C. Memo. 1957-24, to disallow a dependency exemption otherwise allowable, solely because a joint return is filed by the dpendent and his spouse merely as a claim for refund and where no tax liability would exist for either spouse on the basis of separate returns. It will continue to adhere to the position taken in Revenue Ruling 54-5-67.