T.C. Summary Opinion 2008-54
UNITED STATES TAX COURT
WILLIAM N. WARD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10606-07S. Filed May 19, 2008.
Roxanne Grossman and Bradley Ridlehoover (specially
recognized), for petitioner.
Aaron D. Gregory, for respondent.
ARMEN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when the petition was filed.1 Pursuant to section
7463(b), the decision to be entered is not reviewable by any
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 2004,
the taxable year at issue.
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other court, and this opinion shall not be treated as precedent
for any other case.
Respondent determined a deficiency in petitioner’s Federal
income tax for 2004 of $2,426. The issues for decision are
whether petitioner is entitled to claim dependency exemption
deductions for two minor children for 2004 and whether petitioner
is also entitled to claim child tax credits with respect to those
children for the year in issue. For the reasons discussed below,
we sustain respondent’s determination.
Background
Some of the facts have been stipulated, and they are so
found. We incorporate by reference the parties’ stipulations of
facts and the accompanying exhibits.
At the time the petition was filed, William N. Ward
(petitioner) resided in Virginia.
Petitioner claimed dependency exemption deductions on his
2004 Federal income tax return for two of his children, K.W. and
W.W.2 Petitioner also claimed child tax credits with respect to
K.W. and W.W.
Petitioner and the children’s mother separated in October
2002 and were divorced in December 2004. Pursuant to the
2
It is the Court’s policy to use initials when referring
to minors.
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separation agreement,3 joint legal custody of the children was
awarded to petitioner and his ex-wife, although his ex-wife had
primary physical custody. The separation agreement also
specifically provided that petitioner is entitled to claim K.W.
and W.W. as dependents on his tax returns “so long as
[petitioner] is current in the payment of his child support
obligations”. Petitioner’s ex-wife signed the separation
agreement.
Petitioner attached a copy of the separation agreement to
his 2004 Federal income tax return. Previously, and at least for
the taxable year 2002, petitioner’s ex-wife had signed an IRS
Form 8332, Release of Claim to Exemption for Child of Divorced or
Separated Parents, allowing petitioner to claim dependency
exemption deductions for the two children pursuant to the terms
of their divorce. She did not sign a Form 8332 for 2004, despite
the fact that petitioner was current with his child support
obligations for that year. In fact, petitioner’s ex-wife claimed
the dependency exemption deductions herself in violation of the
separation agreement.4
On February 12, 2007, petitioner instituted legal
proceedings in the Virginia Juvenile and Domestic Relations
3
The separation agreement was later incorporated into the
final decree of divorce.
4
Petitioner’s ex-wife was later ordered by a Virginia
court to amend her tax returns.
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District Court of Greene County to enforce the terms of the
separation agreement. As a result, petitioner’s ex-wife paid him
$2,426, an amount equal to the tax effect attributable to the
dependency exemption deductions and child tax credits at issue in
this case.
On February 13, 2007, respondent issued petitioner the
notice of deficiency from which this case arises.
Discussion5
Section 151 allows deductions for personal exemptions,
including exemptions for dependents of the taxpayer. 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. Where the parents of a dependent child are divorced or
legally separated, section 152(e)(1) generally confers the
dependency exemption deduction on the parent with legal custody
of the child (the custodial parent).
As an exception to the general rule, a noncustodial parent
may claim the exemption where the custodial parent executes a
valid written declaration releasing his or her claim to the
exemption and the noncustodial parent attaches that declaration
to his or her Federal income tax return. Sec. 152(e)(2); sec.
5
The issue for decision is essentially legal in nature;
accordingly, we decide it without regard to the burden of proof.
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1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg.
34459 (Aug. 31, 1984).6
The IRS issued Form 8332 to conventionalize the written
declaration requirement of section 152. See, e.g., Chamberlain
v. Commissioner, T.C. Memo. 2007-178. Form 8332 requires a
taxpayer to agree not to claim a dependency exemption deduction
and to furnish: (1) The name of the child for whom exemption
claims are released; (2) the years for which the claims are
released; (3) the signature of the custodial parent; (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. See Miller
v. Commissioner, 114 T.C. 184, 190 (2000), affd. on other grounds
sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir. 2002).
Although taxpayers are not required to use Form 8332, any other
written declaration executed by the custodial parent must conform
to its substance. See id. at 188-189; Chamberlain v.
Commissioner, supra; Neal v. Commissioner, T.C. Memo. 1999-97;
sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., supra. “In
order for a document to qualify as a statement conforming to the
substance of Form 8332, it must contain substantially the same
6
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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information required by Form 8332. In particular, the document
must satisfy the signature requirement of section 152(e)(2).”
Miller v. Commissioner, supra at 191. Section 152(e) is clear;
it allows the dependency exemption to be claimed by a
noncustodial parent only when that parent attaches a valid Form
8332 or its equivalent to a Federal income tax return for the
taxable year in which he or she claims the exemption. See
Paulson v. Commissioner, T.C. Memo. 1996-560; Peck v.
Commissioner, T.C. Memo. 1996-33; see also Brissett v.
Commissioner, T.C. Memo. 2003-310.
Congress added the written declaration requirement to
section 152(e) in 1984 to provide more certainty to the “often
subjective and * * * difficult problems of proof and
substantiation” that accompanied dependency exemption deduction
disputes under the prior statutory scheme. H. Rept. 98-432 (Part
2), at 1498 (1984). Congress sought clarity as to which of two
divorced parents would be allowed the dependency exemption
deduction for a taxable year and accomplished it by conditioning
the noncustodial parent’s claim upon the written verification of
the custodial parent’s release of the claim. To preserve
Congress’s goal, we must insist on strict adherence to the
requirements of section 152. Miller v. Commissioner, supra at
196; Bramante v. Commissioner, T.C. Memo. 2002-228.
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The parties agree that petitioner did not attach a signed
Form 8332 to his Federal income tax return for 2004, but that he
did attach a copy of the separation agreement signed by his ex-
wife. Although a separation or divorce agreement stating that
the dependency exemption deduction belongs to the noncustodial
parent and containing the custodial parent’s signature may serve
as an equivalent to Form 8332 in certain circumstances, the
agreement here does not meet the requirements of section
152(e)(2). In particular, petitioner’s ex-wife makes no
agreement not to claim the dependency exemption deduction
herself. The conditionality of petitioner’s entitlement to the
dependency exemption deduction keeps petitioner’s ex-wife’s
signature from constituting a complete waiver of her right to
claim the deduction as the custodial parent. Miller v.
Commissioner, supra; see sec. 1.152-4T(a), Q&A-3, Temporary
Income Tax Regs., supra.
In Boltinghouse v. Commissioner, T.C. Memo. 2003-134, the
taxpayers attached to their return a copy of a divorce agreement,
which was signed by both the custodial parent and the
noncustodial parent. The divorce agreement in that case
unconditionally granted the noncustodial parent the dependency
exemption deduction, and the Court held that the agreement met
all of the requirements of a written declaration under section
152(e)(2) because it conformed in substance to Form 8332. Unlike
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the divorce agreement in Boltinghouse, the separation agreement
in this case is conditional; that is, petitioner is entitled to
claim the exemptions for K.W. and W.W. only if he is current in
his child support obligations. This condition suggests that
petitioner’s compliance with his support obligations may change
from year to year, such that petitioner’s entitlement to the
dependency exemption deduction for the two children is
potentially subject to change each year. Although petitioner did
meet the condition in 2004, the Internal Revenue Service cannot
be expected to police divorce decrees and separation agreements.
Because of its conditional nature, the relevant part of the
separation agreement does not constitute an equivalent to Form
8332 and thus does not comport with the requirements of section
152(e)(2). See also Brissett v. Commissioner, supra (compliance
with terms of separation agreement not sufficient to authorize
dependency exemption deduction without attaching valid Form 8332
or equivalent).
As for the child tax credits petitioner claimed for K.W. and
W.W., 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 who bears a relationship
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to the taxpayer as prescribed by section 32(c)(3)(B). Sec.
24(c)(1). Because petitioner is not allowed a deduction with
respect to either child under sections 151 and 152, it follows
that for the year in issue, neither child is a qualifying child
and petitioner is not entitled to claim a child tax credit for
either child in 2004.
We note that petitioner has been made whole by his ex-wife’s
$2,426 payment to him as a result of his action in the Virginia
court. We note further that petitioner has an adequate–-and more
effective--remedy in the Virginia courts should his ex-wife again
be noncompliant with the terms of their separation agreement.
Finally, although we appreciate petitioner’s concern that
this issue could arise in future years should his ex-wife not be
in compliance with the terms of their agreement, it is well
established that each tax year stands on its own. See Rose v.
Commissioner, 55 T.C. 28, 32 (1970).
To reflect our disposition of the disputed issues,
Decision will be entered
for respondent.