Is ChatGPT correct?
ChatGPT says:
"To determine whether a person qualifies as a dependent on someone else's tax return, there are different sets of rules based on whether the person is being considered a qualifying child or a qualifying relative.
In the context of a **qualifying relative**, one of the requirements is that the person must have gross income of less than $4,700 (for 2023). To meet this test, the potential dependent’s gross income must be below this threshold.
**Gross income** includes all income that is not explicitly exempt from taxation. However, the exclusion for gain on the sale of a principal residence is explicitly exempt from gross income under Section 121 of the Internal Revenue Code. Therefore, if the $200,000 gain is excluded under Section 121, it would not be included in the dependent's gross income calculation.
In other words, if the taxpayer has an excluded capital gain of $200,000 from the sale of their principal residence, this amount would not count as part of their gross income for the purposes of determining whether they qualify as a dependent. Thus, they would still have to have gross income from other sources above $4,700 to be disqualified as a dependent based on gross income alone."
