T.C. Summary Opinion 2007-164
UNITED STATES TAX COURT
JAMES J. SPUCHES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14370-06S. Filed September 12, 2007.
James J. Spuches, pro se.
John M. Janusz, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time that the petition was filed. Pursuant to
section 7463(b), the decision to be entered is not reviewable by
any other court, and this opinion shall not be treated as
precedent for any other case. Unless otherwise indicated,
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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.
Respondent determined a $1,458 deficiency in petitioner’s
2003 Federal income tax. The issues for decision are whether
petitioner is entitled to a: (1) Dependency exemption deduction;
and (2) child tax credit.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. At the time the petition
was filed, petitioner resided in Sylvan Beach, New York.
Petitioner and Diane E. Spuches (former spouse) obtained a
judgment of divorce in 1994. Their marriage had produced two
daughters (the children). In the divorce proceedings, a
stipulation was entered that provided that petitioner would claim
both dependency exemption deductions until his former spouse was
employed and had incurred a tax liability. On the happening of
that event, the dependency exemption deductions were to be
divided between petitioner and his former spouse. Additionally,
the former spouse was awarded primary custody.
The former spouse’s 2003 Federal income tax return showed
sufficient adjusted gross income to require her to file, and she
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incurred a tax liability. Also, the former spouse had custody of
the children for the greater portion of the year.
For the 2003 taxable year, petitioner filed a joint income
tax return with his current spouse, who is not a party to this
case. On the joint return, petitioner claimed dependency
exemption deductions and child tax credits for the children.
Petitioner did not attach a Form 8332, Release of Claim to
Exemption for Child of Divorced or Separated Parents, or its
equivalent to his joint return.
Respondent issued a notice of deficiency to petitioner.
Respondent denied one of petitioner’s dependency exemption
deductions and a portion of his child tax credits, reasoning that
the former spouse had properly claimed the child as a dependent.
The denial resulted in a $1,458 deficiency.
Discussion
Respondent urges us to sustain the disallowance of
petitioner’s dependency exemption deduction and the portion of
the child tax credit related to the child since petitioner did
not attach a Form 8332 or its equivalent to his 2003 joint
Federal income tax return as required by section 152(e)(2) and
section 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed.
Reg. 34459 (Aug. 31, 1984).
The Commissioner’s determinations in a notice of deficiency
are presumed correct, and the burden is on the taxpayer to prove
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that the determinations are in error. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). However, pursuant to
section 7491(a)(1), the burden of proof on factual issues that
affect the taxpayer’s tax liability may be shifted to the
Commissioner where the “taxpayer introduces credible evidence
with respect to * * * such issue”. The burden will shift only if
the taxpayer has complied with the substantiation requirements
and the taxpayer “has cooperated with reasonable requests by the
Secretary for witnesses, information, documents, meetings, and
interviews”. Sec. 7491(a)(2). Petitioner has not alleged or
proven that section 7491(a) applies. Accordingly, the burden
remains on petitioner.
1. Dependency Exemption Deduction
Section 151(c), in pertinent part, allows a taxpayer to
claim as a deduction the exemption amount for each individual who
is a “dependent” of the taxpayer as defined in section 152 and
who is the taxpayer’s child and satisfies certain age
requirements.
Section 152(a) defines “dependent”, in pertinent part, to
include a “son or daughter of the taxpayer” over half of whose
support for the calendar year in which the taxable year of the
taxpayer begins was received from the taxpayer or is treated under
section 152(c) or (e) as received from the taxpayer.
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Section 152(e)(1) provides a general rule that limits the
dependency exemption deduction as follows: if the child received
over half of his support during the calendar year from his parents
who are divorced under a decree of divorce and the child is in the
custody of one or both parents for more than one-half of the
calendar year, then the child is treated as receiving over half of
his support during the calendar year from the parent having
custody for the greater portion of the calendar year (the
custodial parent).1
But section 152(e)(2) provides an exception to the general
rule of section 152(e)(1): “if * * * the custodial parent signs a
written declaration (in such manner and form as the Secretary may
by regulations prescribe)” that he will not claim the child as a
dependent and the noncustodial parent attaches the written
declaration to his return for the taxable year, then the
noncustodial parent is entitled to the dependency exemption
deduction. For purposes of section 152(e)(2), the term
“noncustodial parent” means the parent who is not the custodial
parent. Sec. 152(e)(2). The temporary regulation states that a
1
In the present case, the exceptions in sec. 152(e)(3) and
(4) do not apply. There was no multiple support agreement as
defined in sec. 152(c), and since the stipulation in petitioner’s
divorce proceeding was entered in 1994, there is no pre-1985
instrument. Thus, petitioner is entitled to the dependency
exemption deduction only if the requirements of sec. 152(e)(2)
are met.
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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”. Sec. 1.152-4T(a), Q&A-3, Temporary Income Tax
Regs., supra.
The written declaration may be made on a form provided by the
Internal Revenue Service or a document that conforms to its
substance. Miller v. Commissioner, 114 T.C. 184, 190-191 (2000)
(citing section 1.152-4T(a), Q&A-3, Temporary Income Tax Regs.,
supra); see also Neal v. Commissioner, T.C. Memo. 1999-97. The
written declaration is embodied in Form 8332, which incorporates
the requirements of section 152(e)(2). Miller v. Commissioner,
supra at 191.2
In Miller v. Commissioner, supra, the Court stated that in
order for the noncustodial parent to claim the dependency
exemption deduction, section 152(e)(2) clearly required the
custodial parent to release the dependency exemption deduction by
signing a written declaration to that effect. Id. at 195. Simply
2
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
the custodial parent, (4) the custodial parent’s Social Security
number, (5) the date of the custodial parent’s signature, and (6)
the noncustodial parent’s name and Social Security number.
Miller v. Commissioner, 114 T.C. 184, 190 (2000).
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attaching a State court order that was not signed by the custodial
parent to the return of the noncustodial parent did not satisfy
the express requirements of section 152(e)(2). Id. at 196. The
mere fact that the State court granted the taxpayer the right to
claim the dependency exemption deduction was immaterial because a
State court cannot determine issues of Federal tax law. Id.
(citing Kenfield v. United States, 783 F.2d 966, 969 (10th Cir.
1986) and White v. Commissioner, T.C. Memo. 1996-438 (citing with
approval Commissioner v. Tower, 327 U.S. 280, 287-288 (1946))).
The parties agree that the former spouse had custody of the
children for the greater portion of the taxable year; therefore,
petitioner is not the “custodial parent” as defined in section
152(e)(1). Because petitioner, the noncustodial parent, did not
attach Form 8332 or its equivalent to his joint return, he is not
entitled to the dependency exemption deduction. Accordingly, we
sustain respondent’s disallowance of the dependency exemption
deduction.
2. Child Tax Credit
Section 24(a) provides a credit against income tax for each
“qualified child” of a taxpayer who is under 17 years of age. A
“qualified child” is one for whom a taxpayer may claim a deduction
under section 151. Sec. 24(c)(1)(A). Thus, a taxpayer is
ineligible for the child tax credit under section 24(a) unless the
taxpayer is eligible for the dependency exemption deduction under
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section 151. Because we have determined that petitioner is not
entitled to the dependency exemption deduction, it follows that he
is not entitled to the child tax credit. Accordingly, we sustain
respondent’s disallowance of the child tax credit.
To reflect the foregoing,
Decision will be
entered for respondent.