T.C. Summary Opinion 2007-176
UNITED STATES TAX COURT
SHAWN A. FINNEGAN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23643-05S. Filed October 22, 2007.
Shawn A. Finnegan, pro se.
Mark J. Miller and Eric Pearson (specially recognized), 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. 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, subsequent
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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 deficiency in petitioner’s Federal
income tax for the year 2003 in the amount of $1,363. The issue
for decision is whether petitioner is entitled to claim a
dependency exemption and a child tax credit for the taxable year
2003, pursuant to sections 151 and 24, respectively.
Background
The stipulation of facts and the attached exhibits are
incorporated herein by reference. At the time the petition was
filed, petitioner resided in Reedsburg, Wisconsin.
Petitioner is employed as a police officer with the Sauk
County, Wisconsin, Sheriff’s Office. Petitioner was involved in
a relationship with Jessica K. Dykstra for an unspecified period
of time prior to 1997. They were never married. In 1997, Ms.
Dykstra gave birth to a male child, M.F.1
In 2000, Ms. Dykstra initiated a paternity action against
petitioner in the Circuit Court, Family Court Branch, Columbia
County, Wisconsin (Family Court). As part of that action, the
Family Court adjudged petitioner to be the father of M.F.,
according to his admission of paternity in open court. Pursuant
to a Judgment on Default (judgment) entered against Ms. Dykstra,
1
The Court uses initials when referring to a minor child.
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the Family Court ordered that with respect to the issue of the
dependency exemption for M.F., petitioner be awarded the tax
dependency exemption for M.F., provided that he was in compliance
with his obligation to maintain health insurance for the child
and current in his child support payments, as provided under the
judgment.
During all taxable years since the child’s birth, including
the taxable year in issue, M.F. has resided with Ms. Dykstra.
Petitioner resides approximately 1 hour away from M.F. and has
parenting time with him approximately once or twice a month.
Petitioner paid $4,852.26 in child support to Ms. Dykstra in
2003. This total comports with the amount that petitioner was
ordered to pay in the underlying judgment.
On his 2003 Federal income tax return, petitioner claimed
the dependency exemption deduction and a child tax credit with
respect to and for M.F. In the notice of deficiency, respondent
explained that he was disallowing petitioner’s claimed exemption
for M.F. on the grounds that another taxpayer had also claimed
the dependency exemption for M.F. for the 2003 taxable year.
Accordingly, respondent disallowed the exemption with respect to
M.F. and correspondingly disallowed petitioner’s claimed child
tax credit.
Subsequent to his receiving the notice of deficiency,
petitioner was made aware of Form 8332, Release of Claim to
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Exemption for Child of Divorced or Separated Parents, and of the
fact that this Form allows custodial parents to release a claim
of dependency exemption for a child. Petitioner sent a copy of
form 8332 to Ms. Dykstra, asking her to complete and sign it. At
that time, petitioner believed that because he was in compliance
with the terms of the aforementioned judgment during the year in
issue, and because he believed that he had contributed over one-
half of M.F.’s total support for 2003, he should be entitled to
claim the deduction. When Ms. Dykstra did not comply with
petitioner’s first request, he brought an enforcement action
against Ms. Dykstra on February 20, 2006, and obtained a court
order for her to sign the Form 8332 for the 2003 taxable year.
Ms. Dykstra ultimately signed a Form 8332 on February 25, 2006,
thereby agreeing not to claim an exemption for M.F. for the 2003
taxable year.
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 taxpayer. 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
shifts the burden of proof to the Commissioner. Sec. 7491(a)(1);
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Rule 142(a)(2). Petitioner did not argue that section 7491 is
applicable in this case, nor did he establish that the burden of
proof should shift to the respondent. Petitioner, therefore,
bears the burden of proving that respondent’s determination in
the notice of deficiency is erroneous. See Rule 142(a); Welch v.
Helvering, supra at 115.
Section 151 allows deductions for personal exemptions,
including exemptions for dependents of the taxpayers. See sec.
151(c). Section 152(a) defines the term “dependent”, in
pertinent part, to include a son or daughter of the taxpayer over
half of whose support for the calendar year was received from the
taxpayer. “[S]upport” includes “food, shelter, clothing, medical
and dental care, education, and the like.” Sec. 1.152-
1(a)(2)(i), Income Tax Regs. In determining whether an
individual received more than one-half of his or her support from
a taxpayer, there shall be taken into account the amount of
support received from the taxpayer as compared to the entire
amount of support which the individual received from all sources.
Id.
Section 152(e) carves out a special exception to the
aforementioned in the case of parents who are divorced or
separated. This exception has been held to apply in cases where
the parents were never married. King v. Commissioner, 121 T.C.
245 (2003). Simply put, section 152(e) provides that if a child
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receives over half of his support from his parents and is in the
custody of one or both of them for more than one-half of the
calendar year, then the parent having custody of the child for a
greater portion of the year at issue (a.k.a. the custodial
parent) is entitled to claim the dependency exemption deduction
for that child unless: (1) The noncustodial parent is shown
entitled to the deduction under section 151 (including section
152(a)), or (2) the custodial parent has validly executed a
written release of his or her right to claim the deduction as the
custodial parent of record.
The parties agree, and the record is clear, that petitioner
was not the custodial parent of M.F. during the year in issue.
Petitioner maintains his entitlement to the exemption
deduction with respect to M.F. because of the terms of the
aforementioned judgment, which gave him the right to claim M.F.
as a dependent so long as he is current in his child support and
health insurance obligations. The record is silent as to any
evidence contrary to the fact that, during the year in issue,
petitioner was compliant with these obligations; however,
although the judgment provides that petitioner would be entitled
to claim a dependency exemption in 2003 for M.F., is it well
settled that State courts, by their decisions, cannot determine
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issues of Federal tax law. See Commissioner v. Tower, 327 U.S.
280 (1946); Miller v. Commissioner, 114 T.C. 184 (2000).
Petitioner also argues his entitlement to claim the
dependency deduction by reason of Ms. Dykstra’s releasing her
claim to an exemption for M.F. for taxable year 2003 on a Form
8332 that she signed on February 26, 2006. Petitioner contends
that Ms. Dysktra’s action comports with the previously discussed
exemption under section 152(e)(2), thus entitling him to claim
the dependency exemption for M.F. for taxable year 2003.
When a custodial parent releases his or her exemption for
more than 1 year, the noncustodial parent must attach the
original release to his tax return for the immediate year and
attach a copy of the release to each succeeding year on which he
claims the dependency deduction. Chamberlain v. Commissioner,
T.C. Memo. 2007-178. Respondent urges that we disregard the Form
8332 submitted by petitioner, on the grounds that he did not
attach a completed Form 8332 or its equivalent to his 2003
Federal income tax return as required by section 152(e)(2) and
section 1.152-4T(a), Temporary Income Tax Regs. 49 Fed. Reg.
34459 (Aug. 31, 1984).
Petitioner admits that he did not attach a Form 8332 to his
timely filed Federal income tax return for 2003. Failure to
attach a valid Form 8332, or an equivalent written declaration to
the return at the time of filing, disqualifies a noncustodial
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taxpayer from claiming a dependency exemption for his minor
child. See Presley v. Commissioner, T.C. Memo. 1996-553.
Section 152(e) is clear; it grants the dependency exemption to a
noncustodial parent only when he or she attaches a valid Form
8332 or its equivalent to a Federal income tax return for the
taxable year on which he or she claims the exemption.
Unfortunately, irrespective of what is contained in the judgment
as to petitioner’s right to claim a dependency exemption for
M.F., the law is clear that a taxpayer is entitled to a
dependency exemption in the taxable year if, and only if, he is
in compliance with section 152. As previously stated, petitioner
has failed to meet this requirement. Accordingly, the Court
concludes, with respect to section 152, petitioner is not
entitled to claim a dependency exemption with respect to M.F. for
taxable year 2003. Accordingly, and because petitioner failed to
comply with this requirement, we sustain respondent’s
disallowance of the dependency exemption claimed by petitioner.
Finally, and with respect to the child tax credit petitioner
claimed for M.F. in 2003, section 24(a) authorizes a child tax
credit with respect to each qualifying child of the taxpayer.
The term “qualifying child” is defined in section 24(c). A
“qualifying child” means an individual with respect to whom the
taxpayer is allowed a deduction under section 151, who has not
attained the age of 17 as of the close of the taxable year, and
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who bears a relationship to the taxpayer as prescribed by section
32(c)(3)(B). Sec. 24(c)(1).
Since petitioner was not allowed a deduction with respect to
M.F. under section 151, it follows that, for the year in issue,
M.F. is not a qualifying child. Consequently, irrespective of
language in the judgment to the contrary, petitioner is not
entitled to claim a child tax credit for M.F. in 2003.
Decision will be entered
for respondent.