T.C. Summary Opinion 2006-46
UNITED STATES TAX COURT
CLIFFORD RAY WOOD, SR., AND DANIELLE DENISE LEVERING-WOOD,
Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15860-04S. Filed March 29, 2006.
Clifford Ray Wood, Sr., pro se.
James H. Harris, for respondent.
GOLDBERG, 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, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
- 2 -
Respondent determined a deficiency in petitioners’ Federal
income tax of $1,650 for the taxable year 2002.
The issue for decision is whether petitioners are entitled
to claim a dependency exemption deduction for JW1 for taxable
year 2002.
Background
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
Newark, Delaware, on the date the petition was filed in this
case.
On April 24, 1999, Clifford Wood, Sr. (petitioner) and
Stephanie Wood (Ms. Wood), petitioner’s former wife, were
married. During the marriage, petitioner and Ms. Wood had one
child, JW, born in 2000. Petitioner and Ms. Wood were divorced
in 2001.2
Petitioner and Ms. Wood’s divorce was granted by a final
divorce decree entered by the Family Court of the State of
Delaware In and For New Castle County. On November 16, 2001,
petitioner and Ms. Wood entered into a separation agreement that
was incorporated into the final divorce decree. The separation
1
The Court uses only the minor child’s initials.
2
After his divorce from Ms. Wood, petitioner married
petitioner Danielle Denise Levering-Wood in July of 2002.
- 3 -
agreement was signed by petitioner, Ms. Wood, and their
respective counsel. The separation agreement states, in
pertinent part, as follows:
THIS AGREEMENT, dated this 16 day of Nov., A.D., 2001,
is made between STEPHANIE WOOD (hereinafter referred to as
“Wife”) [Ms. Wood], and CLIFFORD WOOD, SR., (hereinafter
referred to as “Husband”) [petitioner].
RECITALS
WHEREAS, the parties, Stephanie Wood and Clifford Wood,
Sr., were married in due form on April 24, 1999; and
WHEREAS, one child was born to the marriage of the
parties; namely, * * * [JW, born in 2000];
WHEREAS, diverse disputes, and unhappy differences
arose between Husband and Wife, the said parties legally
separated on May 25, 2001, and are planning to live separate
and apart from one another during the remainder of their
respective lives; and
WHEREAS, the parties have reached an agreement
regarding the division of their marital property and debt,
custody, visitation, child support, and all other matters
ancillary to their separation.
NOW, THEREFOR [sic], in consideration of these facts
and circumstances and of the mutual promises made in this
Agreement, Husband and Wife each agree:
* * * * * * *
CHILD CUSTODY/VISITATION
3. Parties shall have joint custody with Wife being the
primary residential parent.
4. Husband shall have visitation that is equivalent to the
Standard Visitation Guidelines.
The days that Husband shall exercise his visitation
will be by mutual agreement as long as Husband notifies Wife
within twenty-four (24) hours of receiving his monthly work
schedule at or before the beginning of each month. Should
- 4 -
Husband’s work schedule change from that given to Wife at
the beginning of each month, Husband shall notify Wife as
soon as possible or at least within twenty-four (24) hours
of the date that visitation is being changed.
On April 29, 2004, the Family Court of the State of Delaware
In and For New Castle County issued an Order modifying custody of
JW. As the present case pertains to the taxable year 2002, such
Order is not relevant. However, the Court notes that in the
Order dated April 29, 2004, the Family Court of the State of
Delaware ordered that Ms. Wood retain primary residential custody
of JW.
Petitioners filed a Form 1040, U.S. Individual Income Tax
Return, for the 2002 taxable year. Petitioners did not attach a
Form 8332, Release of Claim to the Exemption for Child of
Divorced or Separated Parents, or any statement, waiver, or
declaration conforming to the substance of Form 8332 to their
2002 Federal income tax return. Ms. Wood did not sign a Form
8332 or any statement or waiver stating that she was releasing
her claim to the exemption for JW. In their 2002 Federal income
tax return, petitioners claimed a dependency exemption deduction
for JW.
Respondent disallowed the claimed dependency exemption
deduction for JW. Accordingly, respondent issued to petitioners
a notice of deficiency determining a deficiency of $1,650 in
petitioners’ 2002 Federal income tax.
- 5 -
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct. Welch v. Helvering,
290 U.S. 111, 115 (1933). In pertinent part, Rule 142(a)(1)
provides the general rule that “The burden of proof shall be upon
the petitioner”. In certain circumstances, however, if the
taxpayer introduces credible evidence with respect to any factual
issue relevant to ascertaining the proper tax liability, section
7491 places the burden of proof on the Commissioner. Sec.
7491(a)(1); Rule 142(a)(2). Credible evidence is “‘the quality
of evidence which, after critical analysis, * * * [a] court would
find sufficient * * * to base a decision on the issue if no
contrary evidence were submitted’”.3 Baker v. Commissioner, 122
T.C. 143, 168 (2004) (quoting Higbee v. Commissioner, 116 T.C.
438, 442 (2001)). Section 7491(a)(1) applies only if the
taxpayer complies with substantiation requirements, maintains all
required records, and cooperates with reasonable requests by the
Commissioner for witnesses, information, documents, meetings, and
interviews. Sec. 7491(a)(2). Although neither party alleges the
applicability of section 7491(a), we conclude that the burden of
3
We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
evidence the Court would find sufficient upon which to base a
decision on the issue in favor of the taxpayer. See Bernardo v.
Commissioner, T.C. Memo. 2004-199.
- 6 -
proof has not shifted to respondent with respect to the issue in
the present case.
Moreover, deductions are a matter of legislative grace and
are allowed only as specifically provided by statute. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934).
Section 151(a) authorizes deductions for the exemptions
provided by that section. In particular, section 151(c)(1)
provides an exemption for each of a taxpayer’s dependents, as
defined in section 152, who is a child of the taxpayer and who
has not reached the age of 19 by the close of the taxable year.
Sec. 151(c)(1)(B).
Section 152(a)(1) defines the term “dependent” to include a
taxpayer’s child, provided that more than half of the child’s
support was received from the taxpayer or is treated under
section 152(e) as received from the taxpayer.
In the case of a child of divorced parents, section
152(e)(1) provides as a general rule that the child shall be
treated as receiving over half of his or her support from the
custodial parent. 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. In the event of
so-called split or joint custody, “‘custody’ will be deemed to be
with the parent who, as between both parents, has the physical
- 7 -
custody of the child for the greater portion of the calendar
year.” Id.
Thus, in the present case, because the separation agreement
established that Ms. Wood was the primary residential custodian
of JW throughout 2002, and because petitioner has testified that
JW resided with Ms. Wood for the greater portion of the calendar
year 2002, Ms. Wood was the custodial parent in 2002, and
petitioner was the noncustodial parent.
Section 152(e)(2) provides an exception to the general rule
of section 152(e)(1). Pursuant to that exception, the child
shall be treated as receiving more than half of his or her
support 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.
See sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed.
Reg. 34459 (Aug. 31, 1984).
The declaration required by section 152(e)(2)(A) must be
made either on Form 8332 or on a statement conforming to the
substance of that form. Id.; accord Miller v. Commissioner, 114
T.C. 184, 189 (2000), affd. sub nom. Lovejoy v. Commissioner, 293
F.3d 1208 (10th Cir. 2002). The form provided by the IRS, Form
- 8 -
8332, calls for the following information: (1) The name of the
child or children for whom an exemption claim is released; (2)
the applicable tax year or years for which the claims are
released; (3) the custodial parent’s signature and the date of
signature; (4) the custodial parent’s Social Security number; (5)
the noncustodial parent’s name; and (6) the noncustodial parent’s
Social Security number. “The exemption may be released for a
single year, for a number of specified years (for example,
alternate years), or for all future years, as specified in the
declaration.” Sec. 1.152-4T(a), Q&A-4, Temporary Income Tax
Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984).
In the present case, Ms. Wood, as the custodial parent, did
not sign a Form 8332 or any written declaration or statement
agreeing not to claim the exemption for JW, and no such form,
declaration, or statement was attached to petitioners’ return for
the year in issue.
However, petitioner argues that he provided approximately 86
percent of JW’s support for taxable year 2002, and therefore he
should be entitled to claim the exemption with respect to JW.
Petitioner may have provided 86 percent of JW’s support for
taxable year 2002; however, such a fact does not suffice to
change the express requirements of section 152(e)(2). See Miller
v. Commissioner, supra at 196, where this Court stated:
The control over a child’s dependency exemption conferred on
the custodial parent by section 152(e)(2) was intended by
- 9 -
Congress to simplify the process of determining who is
entitled to claim dependency exemptions for children of a
marriage. See H. Rept. 98-432 (Part 2), at 1498 (1984). To
make section 152(e)(2) work as intended, that control must
be preserved by insisting on adherence to the requirements
of section 152(e)(2) * * *
The law is clear that petitioners are entitled to the child
dependency exemption for JW in 2002 only if they have complied
with the provisions of section 152(e)(2). Petitioners have
failed in this regard. It follows, therefore, that the exception
set forth in section 152(e)(2) does not apply and that the
general rule of section 152(e)(1) does apply. Accordingly,
petitioners are not entitled to deduct the dependency exemption
deduction for JW for taxable year 2002. Sec. 152(e)(1); Miller
v. Commissioner, supra.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.