Final answer:
The statement is true; Sarah cannot claim her son and daughter-in-law as dependents if they file a joint return, as individuals filing a joint return typically cannot be claimed as dependents unless they meet certain exceptions.
Step-by-step explanation:
True or False: Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her. If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents. The answer to this statement is true.
Generally, a taxpayer can claim a dependency exemption for a relative if they provide more than half of that person's total support during the tax year. However, if the individuals being supported file a joint return, they typically cannot be claimed as dependents by another taxpayer. There are exceptions to this rule, but they are not applicable given the information provided.
A relevant comparison can be made in terms of military benefits: A widowed mother who receives her sole support from her unmarried son can receive the same separation allowance as a wife. This illustrates the principle of financial dependency as a criterion for benefits or exemptions.