Taxpayer Claiming Married Child as Dependent

I have received an e-file reject code of 509 sequence 175 on a return I am filing for the taxpayer I'll call (T). I called the IRS e-file help desk, and they tell me(T) must paper file the return with form 8948. Because of this, I just wanted to be sure I am thinking straight.
19 year old daughter (D) lived with the (T) most of 2010. She was a full time college student and (T) paid for her qualifying tuition and books and most of her support. Late in 2010 (D) marries Son-In-Law (SIL). Everybody is in agreement to file in a way that is the most advantageous to the family as a group. This would be with (D) as a dependent of (T).
D has $5,700 in W-2 wages and $600 in SE income (she kept books at the local softball field....and this should be W-2 income, but will save that rant for another time). The only tax she owes, when filing MFS and showing herself as a dependent of another, is $91 in SE tax. She does not qualify for the Make-Work-Pay Credit because she is the dependent of (T). The MFS return has already been accepted by IRS e-file.
(SIL) has $6,700 of W-2 income with no withholding. He is not a dependent of any other taxpayer. When he e-files as MFS he gets the Make-Work-Pay credit of $400. The return has already been accepted by IRS e-file.
Now that I am ready to e-file (T's) return, I am getting a reject code 509 because (D)'s SSN has been used as a spouse SSN on another return.
Do you agree that (T) can take (D's) dependency exemption even though (D) is married but filing separate?
Reply to
In article ,
She is T's qualifying child assuming she did not provide more than half her own support for the year. Send in a paper return.
Reply to
Arthur Kamlet

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