T.C. Memo. 2003-63
UNITED STATES TAX COURT
MICHAEL S. NORWOOD AND CHRISTINE R. NORWOOD, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10281-00. Filed March 5, 2003.
Michael S. Norwood and Christine R. Norwood, pro sese.
Edwina L. Jones, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
JACOBS, Judge: Respondent determined a $2,430 deficiency in
petitioners’ 1998 Federal income tax. After concessions by
respondent, the issues for decision are whether for 1998
petitioners are entitled to dependency exemptions under section
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1511 and to child tax credits under section 24 for petitioner
Christine Norwood’s two sons.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The
stipulation of facts and the attached exhibits are incorporated
herein by this reference.
Petitioners resided in Walhalla, South Carolina, at the time
their petition was filed with this Court. Christine R. Norwood
(petitioner) was formerly married to Thomas V. Harbin. Petitioner
and Mr. Harbin had three children: Cassandra, born July 23, 1978;
Nicholas, born December 10, 1981; and Jason, born February 13,
1983. Petitioner and Mr. Harbin separated in September 1988; they
were divorced in October 1989.
On May 23, 1989, the Family Court, State of South Carolina,
County of Oconee (the Family Court), issued an order (the May 23,
1989, order) that incorporated an agreement between the parties.
At that time, both parties were employed, but the possibility
existed that Mr. Harbin might be laid off and become disabled due
to pending back surgery.
The May 23, 1989, order provided, among other things, that
petitioner would maintain medical insurance coverage for her
children and petitioner and Mr. Harbin would divide equally all
1
Section references are to the Internal Revenue Code in
effect for the year at issue.
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medical, dental, and pharmaceutical expenses not covered by
petitioner’s insurance. The May 23, 1989, order also provided that
(a) for 1989 and for alternate years thereafter, Mr. Harbin could
claim two of the three children as dependents on his income tax
returns, and (b) for 1990 and for alternate years thereafter,
petitioner could claim two of the three children as dependents on
her income tax returns, “continuing until the oldest child attains
majority”.2 Petitioner and Mr. Harbin claimed dependency
exemptions for Nicholas and Jason for the respective years as
provided in the May 23, 1989, order. Neither claimed a dependency
exemption for Cassandra.
The children lived with petitioner until February/March 1993,
when the children began residing with Mr. Harbin. On May 21, 1993,
the Family Court held a hearing with regard to a motion for
temporary relief filed by Mr. Harbin on April 27, 1993. At that
hearing, petitioner agreed that it would be in the children’s best
interests for Mr. Harbin to have custody of them. On May 26, 1993,
the Family Court issued an order (the May 26, 1993, order) that
stated:
IT IS, THEREFORE, ORDERED, ADJUDGED, AND DECREED:
1. The Plaintiff [Mr. Harbin] is granted custody of
Cassandra * * *, Nicholas * * *, and Jason * * *.
* * * * * * *
2
Cassandra, the eldest child, attained majority age of
18 on July 23, 1996.
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3. The Defendant [petitioner] shall pay child
support through the Family Court Support Clerk at the
rate of fifty dollars per month beginning June 1, 1993.
The Defendant shall pay a 3% collection fee making her
payment total $51.50. Should Defendant fail to pay child
support as ordered she may be subjected to wage
garnishment and/or contempt of court proceedings.
4. The Defendant shall maintain insurance on the
children, and the parties shall evenly divide and pay for
any extraordinary medical, dental, and pharmaceutical
expenses of the children.
5. The Defendant shall notify the Plaintiff if she
gains full-time employment or social security disability.
As of June 1993, Mr. Harbin’s gross income was $1,733.33 per month,
whereas, petitioner had a monthly income of $291.63.
Sometime between June and September 1993, petitioner began
receiving disability payments from Social Security of approximately
$200 per month; these payments were sent to Mr. Harbin for the
support of the children. On October 14, 1993, the Family Court
issued another order that terminated as of September 1, 1993,
petitioner’s obligation to pay child support through the court to
Mr. Harbin.
During 1998, Nicholas and Jason resided with Mr. Harbin.
Cassandra and her daughter, Brooklyn Harbin (Brooklyn), resided
with petitioners.
On their 1998 Form 1040A, U.S. Individual Income Tax Return,
petitioners claimed dependency exemption deductions and child tax
credits for Nicholas, Jason, and Brooklyn. However, petitioners did
not attach to their 1998 Form 1040A, nor did they send under
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separate cover to respondent, a copy of Form 8332, Release of Claim
to Exemption for Child of Divorced or Separated Parents, signed by
Mr. Harbin who was the custodial parent.
On August 18, 2000, respondent mailed a notice of deficiency
to petitioners. In that notice, respondent disallowed petitioners’
claimed exemption deductions and child tax credits for Nicholas,
Jason, and Brooklyn on the grounds that petitioners failed to verify
petitioners’ entitlement thereto. Prior to trial, respondent
conceded petitioners’ entitlement to an exemption deduction and
child tax credit for Brooklyn.
OPINION
Dependency Exemption
In general, a taxpayer is entitled to an exemption for each
dependent child under 19 years of age. Sec. 151(c)(1)(B)(i). To
be so entitled, the taxpayer must provide (or be treated as
providing) over half of the child’s support in the year for which
the exemption is claimed. Sec. 152(a). Where parents are divorced
or separated, the parent who has physical custody of a child for the
greater portion of the calendar year (the custodial parent)
generally is deemed to have provided more than half of such child’s
support in that year. Sec. 152(e)(1).
Section 152(e)(2), however, provides an exception to the
general rule of section 152(e)(1). Under section 152(e)(2), a child
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will be treated as receiving more than half of his support during
a calendar year from the noncustodial parent if:
(A) the custodial parent signs 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 for any taxable year
beginning in such calendar year, and
(B) the noncustodial parent attaches such written
declaration to the noncustodial parent’s return for the
taxable year beginning during such calendar year. [Sec.
152(e)(2)(A) and (B).]
The Internal Revenue Service has prescribed Form 8332 as the
appropriate form by which the noncustodial parent may satisfy the
written declaration requirement of section 152(e)(2). See Miller
v. Commissioner, 114 T.C. 184, 190 (2000), affd. on another ground
sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir. 2002);
sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg.
34459 (Aug. 31, 1984). Form 8332 requires, among other things,
that the custodial parent declare that he or she will not claim an
exemption for the child or children named on the form for the years
for which the exemption claim is being released.
In the case before us, petitioner does not dispute that for
1998, Mr. Harbin was the custodial parent of Nicholas and Jason.
As such, he ordinarily would be entitled to the dependency
exemptions for Nicholas and Jason for 1998. To claim Nicholas and
Jason as dependents for 1998, petitioner, as the noncustodial
parent, would have had to have attached to her 1998 income tax
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return a copy of Form 8332, signed by Mr. Harbin, releasing his
claim to the exemptions. This she did not do.
Petitioner’s assertion that she is entitled to claim the
dependency exemptions for Nicholas and Jason in 1998 is premised
on the May 23, 1989, order which states that petitioner and Mr.
Harbin may claim two dependents in alternate years. However,
petitioners’ position is not supported by the May 23, 1989, order
because it specifically states that those provisions of the order
relating to the parent who may claim the dependency exemptions
terminate when “the oldest child attains majority”. (Petitioner’s
oldest child, Cassandra, turned 18 on July 23, 1996.) Petitioner
contends “that is not what the judge intended.” According to
petitioner, the judge meant to say in his order “until your youngest
child (not the oldest child) is 18 years old.”
Even if, as petitioner asserts, the May 23, 1989, order was in
error, that order was superseded by the May 26, 1993, order giving
sole custody of the children to Mr. Harbin. See sec. 1.152-4(b),
Income Tax Regs. (custody determined by most recent decree). Under
Federal tax law, Mr. Harbin, as custodial parent, was entitled to
dependency exemptions for Nicholas and Jason for 1998.
Consequently, any order issued by the Oconee County Family Court
(even an order attempting to grant dependency exemptions for
Nicholas and Jason to petitioner for 1998) would not per se entitle
petitioner, as the noncustodial parent, to the claimed dependency
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exemptions for Nicholas and Jason for 1998. See Miller v.
Commissioner, supra. Petitioners did not attach to their 1998
income tax return a written declaration signed by Mr. Harbin
releasing his right to dependency exemptions for Nicholas and Jason
for 1998. Thus, under Federal tax law, petitioners are not entitled
to the dependency exemptions for Nicholas and Jason. To conclude
this aspect of our opinion, because petitioner, the noncustodial
parent, did not meet the written declaration requirement, she does
not come within the statutory exception provided in section
152(e)(2). See Loffer v. Commissioner, T.C. Memo. 2002-298; Horn
v. Commissioner, T.C. Memo. 2002-290; Neal v. Commissioner, T.C.
Memo. 1999-97; Cafarelli v. Commissioner, T.C. Memo. 1994-265; Brown
v. Commissioner, T.C. Memo. 1992-548, affd. without published
opinion 7 F.3d 1042 (8th Cir. 1993). Accordingly, we hold that
petitioner is not entitled to the claimed dependency exemptions for
Nicholas and Jason for 1998.
Child Tax Credit
Section 24(a) provides that a taxpayer may claim a credit for
“each qualifying child”. A qualifying child is defined, inter alia,
as any individual if “the taxpayer is allowed a deduction under
section 151 with respect to such individual for the taxable year”
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and the child is under the age of 17 at the close of the calendar
year for which the tax credit is claimed.3 Sec. 24(c)(1)(A) and
(B).
Because petitioner is not entitled to dependency exemptions
under section 151 with respect to Nicholas and Jason for 1998,
petitioner does not have an eligible or qualifying child.
Accordingly, petitioner is not entitled to the claimed child tax
credits under section 24(a) with respect to Nicholas and Jason for
1998.
To reflect the foregoing and respondent’s concessions,
Decision will be entered
under Rule 155.
3
We are mindful that Nicholas was born on Dec. 10, 1981,
and therefore reached age 17 on Dec. 10, 1998. Consequently,
even if petitioner were entitled to a dependency exemption for
Nicholas (which she is not), Nicholas would not be a “qualifying
child” for purposes of the child tax credit.