T.C. Memo. 1996-438
UNITED STATES TAX COURT
WILLIAM C. AND KATHERINE H. WHITE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17786-95. Filed September 25, 1996.
William C. and Katherine H. White, pro se.
Roslyn D. Grand, for respondent.
MEMORANDUM OPINION
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7443A(b)(3)1 and Rules 180, 181, and 182.
Respondent determined a deficiency of $1,288 in petitioners'
1992 Federal income tax.
1
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year at issue. All Rule
references are to the Tax Court Rules of Practice and Procedure.
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The sole issue for decision is whether petitioners are
entitled to deductions for dependency exemptions under section
151 for their 1992 tax year for the two children of William C.
White (petitioner) from a former marriage.
Some of the facts were stipulated, and those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time their petition was filed, petitioners'
legal residence was Atlanta, Georgia.
Petitioner was previously married to Virginia White (Ms.
White). Two children were born of this marriage: Christopher,
born March 30, 1983, and Allison, born April 13, 1985.
Petitioner and Ms. White were divorced on March 14, 1989,
pursuant to a Dual Judgment of Divorce (divorce decree) issued by
the Superior Court of New Jersey, Chancery Division. In the
divorce decree, petitioner and Ms. White were granted joint
custody of the two children; however, the primary residence of
the children was declared to be with Ms. White. Since the
divorce, Christopher and Allison have resided with Ms. White.
The divorce decree further provides that petitioner "shall be
entitled to claim the two (2) children of the marriage as his
beneficiaries for income tax purposes. The Plaintiff [Ms. White]
shall execute whatever documents may be required to enable the
Defendant [petitioner] to claim the children as his exemptions."
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On November 6, 1989, Ms. White signed a letter prepared by
petitioner that states, in pertinent part:
According to the Terms and Conditions of the divorce decree
between Virginia E. White and William C. White, Virginia
must execute the appropriate papers that will entitle
William C. White to claim Christopher and Allison as
dependents.
As stated in the decree "The Defendant, (William C. White)
shall be entitled to claim the two (2) children of the
marriage as his beneficiaries for income tax purposes. The
Plaintiff, (Virginia E. White) shall execute whatever
documents may be required to enable the Defendant to claim
the children as his exemptions."
Subsequently, on January 1, 1990, petitioner married
Katherine H. White. On their 1992 joint Federal income tax
return (return), petitioners claimed dependency exemptions for
Christopher and Allison. Attached to the return was a copy of
the November 6, 1989, letter signed by Ms. White. For tax year
1992, Ms. White also claimed dependency exemptions for the two
children.
In the notice of deficiency, respondent disallowed the
deductions for dependency exemptions claimed by petitioners
"Since the attached copy of the letter dated November 6, 1989,
did not specify the time period you may claim your dependents
exemption".
The determinations of the Commissioner in a notice of
deficiency are presumed correct, and the burden of proof is on
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the taxpayer to prove that the determinations are in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111 (1933).
Section 151(c) allows taxpayers an annual exemption amount
for each "dependent" as defined in section 152. Under section
152(a), the term "dependent" means certain individuals, such as a
son, daughter, stepson, or stepdaughter, "over half of whose
support, for the calendar year in which the taxpayer year of the
taxpayer begins, was received from the taxpayer (or is treated
under section (c) or (e) as received from the taxpayer)".
The support test in section 152(e)(1) applies if: (1) A
child receives over half of his support during the calendar year
from his parents; (2) the parents are divorced under a decree of
divorce; and (3) such child is in the custody of one or both of
his parents for more than one-half of the calendar year. If
these requirements are satisfied, as in the present case, the
"child shall be treated, for purposes of subsection (a), as
receiving over half of his support during the calendar year from
the parent having custody for the greater portion of the calendar
year (* * * referred to as the custodial parent)", thus, allowing
the dependency exemption to be claimed by the "custodial parent".
Sec. 152(e)(1).
To decide who has custody, section 1.152-4(b), Income Tax
Regs., provides that custody "will be determined by the terms of
the most recent decree of divorce" if there is one in effect.
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Since petitioner's divorce decree declares that the primary
residence of the children shall be with Ms. White, she is
considered the children's "custodial parent" under section
152(e).
Petitioner, as the "noncustodial parent", is allowed to
claim a child as a dependent only if one of three statutory
exceptions are met. Under these exceptions, the "noncustodial
parent is treated as providing over half of a child's support
and, therefore, entitled to the dependency exemption if:
(1)(a) The custodial parent signs a written declaration
that such custodial parent will not claim such child as a
dependent, and
(b) the noncustodial parent attaches such written
declaration to the noncustodial parent's return for the taxable
year (section 152(e)(2)); or
(2) a multiple support agreement pursuant to section 152(c)
determines support (section 152(e)(3)); or
(3)(a) a qualified pre-1985 instrument provides that the
noncustodial parent shall be entitled to any deduction allowable
under section 151 for such child, and
(b) the noncustodial parent provides at least $600 for the
support of such child during the calendar year (section
152(e)(4)).
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In the present case, the exceptions described as paragraphs
(2) and (3) above, in section 152(e)(3) and (4), do not apply.
There was no multiple support agreement and no pre-1985
instrument since petitioner's divorce decree was rendered after
1985. Therefore, petitioner is only entitled to the dependency
exemptions if the requirements of section 152(e)(2) are met,
described as paragraph (1) above.
Section 152(e)(2)(A) specifically requires that the
custodial parent sign "a written declaration (in such manner and
form as the Secretary may by regulations prescribe) that such
custodial parent will not claim such child as a dependent".
Pursuant to this statutory provision, temporary regulations were
promulgated that provide that, "The written declaration may be
made on a form to be provided by the Service for this purpose.
Once the Service has released the form, any declaration made
other than on the official form shall conform to the substance of
such form." Sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs.,
49 Fed. Reg. 34459 (Aug. 31, 1984).2 Internal Revenue Service
Form 8332, Release of Claim to Exemption for Child of Divorced or
Separated Parents, requires the (1) name of the children for
2
The Court notes that temporary regulations have binding
effect and are entitled to the same weight as final regulations.
Peterson Marital Trust v. Commissioner, 102 T.C. 790, 797 (1994),
affd. 78 F.3d 795 (2d Cir. 1996); Truck & Equipment Corp. v.
Commissioner, 98 T.C. 141, 149 (1992); see LeCroy Research
Systems Corp. v. Commissioner, 751 F.2d 123, 127 (2d Cir. 1984),
revg. on other grounds T.C. Memo. 1984-145.
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which exemption claims were released, (2) years for which the
claims were released, (3) signature of the custodial parent, (4)
Social Security number of the custodial parent, (5) date of
signature, and (6) name and Social Security number of the parent
claiming the exemption.
In this case, the Court finds that the November 6, 1989,
letter signed by Ms. White fails to "conform to the substance" of
Form 8332. Sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs.
The letter fails to state the years in which Ms. White was
releasing the claims for exemption, nor does the letter state the
Social Security numbers of either parent. Most importantly, the
letter fails to explicitly state that Ms. White would not claim
Christopher and Allison as dependents. In fact, for 1992, Ms.
White did claim the children as dependents. The letter relied on
by petitioner is essentially nothing more than a restatement of
the divorce decree. It has no other meaning or significance.
While the Court sympathizes with petitioner and understands
petitioner's intentions in having Ms. White sign the letter
prepared by him, unfortunately, the requirements of section
152(e)(2)(A) have not been met in this case.
Although petitioner's divorce decree provides that he is
entitled to the dependency exemptions for the two children, State
courts, by their decisions, cannot determine issues of Federal
tax law. Commissioner v. Tower, 327 U.S. 280 (1946); Kenfield v.
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United States, 783 F.2d 966 (10th Cir. 1986); Nieto v.
Commissioner, T.C. Memo. 1992-296. Thus, the Court concludes
that, pursuant to section 152(e), petitioner is not entitled to
claim his two children as dependents for 1992. His remedy, if
any, lies in the State court for enforcement of the divorce
decree.
Decision will be entered
for respondent.