even the IRS got it wrong which was corrected by a tax court.
from case law and IRS REG 1.152-2(d)
but given the divorce, do X and Y still count as step-children?
As it turns out the regulations provide that
"[t]he relationship of affinity once existing will not terminate by divorce or death of a spouse ."
So the Tax Court ruled that
petitioner's divorce did not terminate his stepparent-stepchild relationships with X and Y. Accordingly, they are petitioner's stepchildren, thus satisfying the relationship test. We therefore hold that X and Y are petitioner's qualifying children for purposes of the dependency exemption (2011 case. there is no longer a dependency exemption)
thus based on the REG and case law he is still your stepson.
