T.C. Summary Opinion 2006-123
UNITED STATES TAX COURT
TOMMIE AND FELECIA VERNELL WILDER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14794-05S. Filed August 1, 2006.
Tommie and Felecia Vernell Wilder, pro sese.
Rebecca M. Clark, for respondent.
PANUTHOS, Chief 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.
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Respondent determined a deficiency of $2,914 in petitioners’
2002 Federal income tax. After a concession by respondent,1 the
issues for decision are: (1) Whether petitioners are entitled to
dependency exemption deductions for petitioner husband’s son and
daughter, and (2) whether respondent is estopped from disallowing
the claimed dependency exemption deductions.
Background
Some of the facts have been stipulated and are so found.
Petitioners are married and resided in Westland, Michigan, at the
time their petition was filed. Unless otherwise indicated, all
references to petitioner are to Tommie Wilder.
Petitioner and Sharon Williams have two children, their son
BW and daughter TW (collectively, “the children”).2 Petitioner
and Ms. Williams were never married and did not live together in
2002. The children lived with Ms. Williams during that year,
although petitioner provided most of the children’s support.
Petitioners claimed the children as dependents on their
joint 2002 Federal income tax return. Petitioners did not attach
to their return a Form 8332, Release of Claim to Exemption for
Child of Divorced or Separated Parents, executed by Ms. Williams.
1
Petitioners claimed dependency exemption deductions for
four children. Respondent concedes petitioners are entitled to
such deductions for two of the children.
2
Petitioner’s son is a minor. Although the record is not
entirely clear, it appears petitioner’s daughter may also be a
minor. We therefore use only the children’s initials.
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In the notice of deficiency, respondent disallowed the claimed
dependency exemption deductions.
Discussion
In general, the Commissioner’s determinations set forth in a
notice of deficiency are presumed correct, and the taxpayer bears
the burden of showing that the determinations are in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Pursuant
to section 7491(a), the burden of proof as to factual matters
shifts to the Commissioner under certain circumstances. We
decide this case without regard to the burden of proof.
Accordingly, we need not decide whether section 7491(a) applies
in this case.
Issue 1. Dependency Exemption Deductions
A taxpayer may be entitled to claim as a deduction an
exemption amount for each of his dependents. Sec. 151(c). A
child of the taxpayer is considered a dependent if the child has
not attained the age of 19 at the close of the year and more than
half the child’s support for the year was received from the
taxpayer. Secs. 151(c)(1)(B), 152(a)(1).
In the case of a child of parents who have lived apart at
all times during the last 6 months of the calendar year, the
support test is set forth in section 152(e). See sec.
152(e)(1)(A)(iii). If the child is in the custody of one or both
of his parents for more than half of the calendar year and
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receives more than half of his support during that year from his
parents, such child shall be treated as receiving over half of
his support during the calendar year from the parent having
custody for a greater portion of the calendar year (the custodial
parent). Sec. 152(e)(1).
A custodial parent may release claim to the exemption
pursuant to the provisions of section 152(e)(2), which provides:
SEC. 152(e). Support Test in Case of Child of
Divorced Parents, Etc.--
* * * * * * *
(2) Exception where custodial parent
releases claim to exemption for the year.--A child
* * * shall be treated as having received over
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.
For purposes of this subsection, the term
“noncustodial parent” means the parent who is not
the custodial parent.
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The support test set forth in section 152(e) applies even if the
child’s parents have never been married. King v. Commissioner,
121 T.C. 245, 248-252 (2003).
The temporary regulations promulgated with respect to
section 152(e)(2) provide that a noncustodial parent may claim
the exemption for a dependent child “only if the noncustodial
parent attaches to his/her income tax return for the year of the
exemption a written declaration from the custodial parent stating
that he/she will not claim the child as a dependent for the
taxable year beginning in such calendar year.”3 Sec.
1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg.
34459 (Aug. 31, 1984); see also Miller v. Commissioner, 114 T.C.
184, 188-189 (2000), affd. on another ground sub nom. Lovejoy v.
Commissioner, 293 F.3d 1208 (10th Cir. 2002). The declaration
required under section 152(e)(2) must be made either on a
completed Form 8332 or on a statement conforming to the substance
of Form 8332. Miller v. Commissioner, supra at 189; Brissett v.
Commissioner, T.C. Memo. 2003-310.
Form 8332 requires a taxpayer to furnish: (1) The names of
the children for which exemption claims were released; (2) the
years for which the claims were released; (3) the signature of
3
Temporary regulations are entitled to the same weight as
final regulations. See Peterson Marital Trust v. Commissioner,
102 T.C. 790, 797 (1994), affd. 78 F.3d 795 (2d Cir. 1996); Truck
& Equip. Corp. v. Commissioner, 98 T.C. 141, 149 (1992).
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the custodial parent confirming his or her consent; (4) the
Social Security number of the custodial parent; (5) the date of
the custodial parent’s signature; and (6) the name and the Social
Security number of the parent claiming the exemption. Miller v.
Commissioner, supra at 190.
Petitioner and Ms. Williams lived apart during the last 6
months of 2002. We therefore apply the support test found in
section 152(e). See sec. 152(e)(1)(A)(iii). Petitioner
testified that the children lived with Ms. Williams during the
year in issue. Accordingly, Ms. Williams was the custodial
parent, and petitioner was the noncustodial parent for purposes
of section 152(e). Petitioners are not entitled to the claimed
dependency exemptions unless they complied with the provisions of
section 152(e)(2) and the regulations thereunder by attaching to
their return a written declaration or Form 8332 executed by Ms.
Williams. Petitioners did not attach such a declaration or Form
8332 to their return, and, as a result, they are not entitled to
deduct dependency exemptions for BW and TW in 2002.
Issue 2. Estoppel
Petitioner contends that sometime in the mid-1990s, he spoke
to an Internal Revenue Service (IRS) employee about claiming BW
and TW as dependents. According to petitioner, the IRS employee
indicated that the children qualified as petitioners’ dependents
for Federal income tax purposes. Petitioner asserts that for the
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taxable years 1996 through 2001, petitioners claimed--and
respondent did not disallow--a dependency exemption deduction for
each child. Petitioner argues, on the basis of his alleged
conversation with the IRS employee, that respondent is estopped
from disallowing the claimed deductions.
Equitable estoppel is a judicial doctrine that precludes a
party from denying his own acts or representations which induced
another to act to his detriment. Hofstetter v. Commissioner, 98
T.C. 695, 700 (1992). It is well settled, however, that the
Commissioner cannot be estopped from correcting a mistake of law,
even where a taxpayer may have relied to his detriment on that
mistake. Norfolk S. Corp. v. Commissioner, 104 T.C. 13, 59-60
(1995), affd. 140 F.3d 240 (4th Cir. 1998). An exception exists
only in the rare case where a taxpayer can prove he or she would
suffer an unconscionable injury because of that reliance. Id.
The following conditions must be satisfied before equitable
estoppel will be applied against the Government: (1) A false
representation or wrongful, misleading silence by the party
against whom the opposing party seeks to invoke the doctrine; (2)
an error in a statement of fact and not in an opinion or
statement of law; (3) ignorance of the true facts; (4) reasonable
reliance on the acts or statements of the one against whom
estoppel is claimed; and (5) adverse effects of the acts or
statements of the one against whom estoppel is claimed. Id.
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Even if we assume an IRS employee made the statement that
petitioner described, respondent is not bound by that
representation. Petitioners have not shown that they would
suffer unconscionable injury as a result of relying on the
alleged statement. In fact, it appears that from 1996 through
2001, petitioners may have received the benefit of deductions to
which they were not entitled. Furthermore, the IRS employee’s
error, if any, was in a statement of law. Accordingly,
respondent is not estopped from disallowing the claimed
dependency exemption deductions. Respondent’s determination is
sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered under
Rule 155.