Rev. Rul. 74-543

Advice has been requested whether child insurance benefit payments made under section 202(d) of Title II of the Social Security Act, as amended, 42 U.S.C. 402, to the child of a disabled parent, must be considered as furnished by the child in determining who furnished more than one-half of the child's support for purposes of section 151(e) of the Internal Revenue Code of 1954.

Section 151(e) of the Code allows a dependency exemption for a dependent as defined in section 152. Section 152(a) provides, in part, that a dependent includes a child of the taxpayer over half of whose support for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer (or is treated under subsection (e) as received from the taxpayer).

Section 1.152-1(a)(2)(i) of the Income Tax Regulations provides, in part, that for purposes of determining whether or not an individual received, for a given calendar year, over half of his support from the taxpayer, there shall be taken into account the amount of support received from the taxpayer as compared to the entire amount of support the individual received from all sources, including support which the individual himself supplied.

Section 1.152-1(a)(2)(ii) of the regulations provides, in part, that in computing the amount which is contributed for the support of an individual there must be included any amount which is contributed by such individual for his own support, including income which is ordinarily excludable from gross income, such as benefits received under the Social Security Act.

Rev. Rul. 57-344, 1957-2 C.B. 112, holds that survivors insurance benefit payments under section 202 of Title II of the Social Security Act received and used by the child of a deceased individual in the care of the surviving parent, or other person having custody of the child, are considered as the child's contribution toward his support in determining who furnished more than one-half of the child's support for purposes of section 151(e) of the Code.

Section 202(d)(1) of Title II of the Social Security Act, as amended, provides, in part, that every child (as defined in section 216(e)) of an individual entitled to disability insurance benefits shall be entitled to a child's insurance benefit provided certain requirements are satisfied.

In view of section 1.152-1(a)(2)(ii) of the regulations which requires that benefits received for support of an individual under the Social Security Act be included in the computation of his support, and Rev. Rul. 57-344 which holds that survivors insurance benefit payments received and used for the support of the child of a deceased individual must be considered as the child's contribution toward his support, it is held that a child's insurance benefit payment made under section 202(d) of Title II of the Social Security Act, as amended, to the child of a disabled parent and used for the child's support must be considered as furnished by the child in determining who furnished more than one-half of the child's support for purposes of section 151(e) of the Code.