T.C. Summary Opinion 2003-118
UNITED STATES TAX COURT
DONNELL L. JAMES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3668-02S. Filed August 25, 2003.
Donnell L. James, pro se.
Daniel J. Parent, for respondent.
PAJAK, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the year in issue.
Respondent determined a deficiency in petitioner’s 1999
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Federal income tax in the amount of $2,540. The Court must
decide whether petitioner has a written waiver from the custodial
parent so that he is entitled to claimed dependency exemption
deductions for Donnell James II and Destiney James.
Some of the facts in this case have been stipulated and are
so found. Petitioner resided in Stockton, California, when his
petition was filed.
During their marriage, petitioner and Trudy James (Ms.
James) had two children. Donnell James II was born on May 20,
1989, and Destiney James was born on March 7, 1994. On March 4,
1999, the Notice of Entry of Judgment for the dissolution of the
marriage between petitioner and Ms. James was entered. Ms. James
was awarded sole physical custody of both children and had
physical custody during 1999.
On her 1999 Federal income tax return, Ms. James claimed
dependency exemption deductions for Donnell James II and Destiney
James. Following an audit of Ms. James’ 1999 Federal income tax
return, respondent allowed Ms. James the dependency exemptions
for both children.
On his 1999 Federal Income tax return, petitioner claimed
dependency exemptions for both children. Following an inquiry by
respondent, petitioner provided respondent with a copy of a Form
8332, Release of Claim to Exemption for Child of Divorced or
Separated Parents. A copy of this form was also sent to
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respondent’s Service Center at the time petitioner electronically
filed his 1999 Federal income tax return along with the form
containing petitioner’s signature. Respondent disallowed the two
exemptions claimed by petitioner.
Section 151(c) allows a taxpayer to deduct an annual
exemption amount for each dependent, as defined in section 152.
Under section 152(a), the term “dependent” means, in pertinent
part, a son or daughter of the taxpayer over half of whose
support was received from the taxpayer. Sec. 152(a)(1).
In the case of a child of divorced parents, section
152(e)(1) provides in pertinent part that if a child receives
over half of his support from his parents who are divorced under
a decree of divorce and the child is in the custody of one or
both of his parents for more than one-half of the year, then the
child will be treated as receiving over half of his support from
the parent having custody for a greater portion of the calendar
year.
Section 1.152-4(b), Income Tax Regs., provides that the term
“custody” is “determined by the terms of the most recent decree
of divorce”. Because the divorce decree grants Ms. James full
custody of both children, she is considered the children’s
“custodial parent” under section 152(e). Cafarelli v.
Commissioner, T.C. Memo. 1994-265.
Petitioner, as the “noncustodial parent”, is allowed to
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claim the children as dependents only if one of three statutory
exceptions in section 152(e) is met. If an exception is met, the
“noncustodial parent” is treated as providing over half of a
child’s support. We focus on section 152(e)(2), the one
exception on which petitioner relies.
Section 152(e)(2) will apply if “the custodial parent signs
a written declaration” that such custodial parent will not claim
such child as a dependent, and the noncustodial parent attaches
such written declaration to the noncustodial parent’s return for
the taxable year.
A Form 8332 was provided by petitioner. Ms. James signed
the form for 1997 before other words were added. Petitioner at
trial admitted he wrote the words “98 ‘All Future Years’” after
the reference to 1997 on the Form 8332. Petitioner claimed this
was agreed to verbally, which is inconsistent with the fact that
Ms. James claimed both children for 1999.
Under the statute, the “custodial parent” must sign a
“written declaration” releasing his or her claim to the
exemption. For 1999, petitioner had no written declaration
signed by the custodial parent, Ms. James. See sec. 1.152-4T(a),
Q&A-4, Temporary Income Tax Regs., 49 Fed. Reg. 34459 (Aug. 31,
1984). Petitioner was not entitled to claim the dependency
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exemptions.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.