T.C. Summary Opinion 2010-16
UNITED STATES TAX COURT
NORMA KAY LITTON a.k.a. CASEY LITTON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3933-09S. Filed February 22, 2010.
Casey Litton, pro se.
Brock E. Whalen, for respondent.
DAWSON, Judge: This case was heard pursuant to the
provisions of section 74631 of the Internal Revenue Code in
effect when the petition was filed. Pursuant to section 7463(b),
the decision to be entered is not reviewable by any other court,
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended and 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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and this opinion shall not be treated as precedent for any other
case.
Respondent determined a deficiency of $4,850 in petitioner’s
Federal income tax for 2006. The issues for decision are: (1)
Whether petitioner is entitled to dependency exemption deductions
for her son and daughter; (2) whether petitioner is entitled to
the child tax credit; and (3) whether petitioner is entitled to
head of household filing status.
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.
At the time the petition was filed, petitioner resided in
Texas.
Petitioner and Gregory Lee Litton (Mr. Litton) were married
in 1986. They have two children, a son, M.C., who was born in
1992, and a daughter, J.K., who was born in 1995.2
On March 13, 1997, petitioner and Mr. Litton were divorced
pursuant to a final decree of divorce (decree) entered by the
District Court of Williamson County, Texas. The decree listed
Mr. Litton’s residence as the “present address” of the children.
2
The Court refers to minor children by their initials. See
Rule 27(a)(3).
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The decree made no provision with respect to allocating
dependency exemption deductions for the children.
The decree named petitioner and Mr. Litton as “Joint
Managing Conservators” of the children, but it provided that Mr.
Litton “shall have the exclusive right to determine the residence
and domicile of the children.” The decree also provided that Mr.
Litton “shall have possession of the children at all times not
specifically awarded in this decree to NORMA KAY CASEY LITTON
(petitioner), or otherwise mutually agreed by the parties.”
In a standard possession order, which was incorporated in
the decree, the district court set forth detailed guidelines
regarding “possession” of the children. In particular, the
standard possession order provided that petitioner “shall have
possession of the child at any and all times mutually agreed to
in advance by the parties, and, failing mutual agreement,” shall
have the right to possession of the children as follows:
1. On Tuesday and Thursday during the regular school
term starting at 6:00 p.m. until the next morning;
2. On the first, third, and fifth weekends of each
month starting at 6:00 p.m. on Friday and ending on
Sunday at 6:00 p.m. (This period of possession is
extended by one day in the event that a school
holiday falls on a Friday or Monday.)
3. During the Christmas holiday in even-numbered years
on the day that the child is dismissed from school
for Christmas vacation and ending at noon on
December 26;
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4. On Mother’s Day, if not otherwise entitled to
possession, from 6:00 p.m. on the Friday preceding
and ending at 6:00 p.m. on Mother’s Day;
5. During spring break of even-numbered years beginning
at 6:00 p.m. on the day that the child is dismissed
from school and ending at 6:00 p.m. on the day
before school resumes after that vacation; and
6. For 30 days (consecutive or nonconnective depending
upon whether petitioner gives advance notice by May
1st to Mr. Litton) during summer vacation, subject
to the right of Mr. Litton to have possession of the
children for one weekend during this period.
Mr. Litton was awarded possession of the children if not
otherwise entitled:
1. On Thanksgiving in even-numbered years beginning at
6:00 p.m. on the day the child is dismissed from
school before Thanksgiving and ending at 6:00 p.m.
on the following Sunday; and
2. On Father’s Day beginning at 6:00 p.m. on the Friday
preceding and ending at 6:00 p.m. on Father’s Day.
On March 27, 2003, a final order in suit to modify parent-
child relationship (modification order) was entered. The
modification order decreased petitioner’s child support
obligation from $650 to $200 per month but did not alter the
custody arrangement set forth in the decree. The modification
order does show Mr. Litton’s address as being the children’s
residence.
Petitioner and Mr. Litton observed the terms of the standard
possession order during 2006. Each attempted to accommodate the
other’s reasonable requests, and they sometimes deviated from the
terms of that order upon their mutual agreement. They also
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agreed to allow the children to spend some Sunday nights at
petitioner’s home for the weekends that she had custody of the
children.
Petitioner kept a detailed and contemporaneous calendar log
showing the days and nights the children were residing in her
custody during 2006. Her custody records were more complete and
precise than those kept by Mr. Litton.
In a letter dated April 30, 2006, and sent to Mr. Litton by
certified mail on May 1, 2006, petitioner stated:
As suggested by federal judge Armen, in court on
3/13/2006, I am enclosing a copy of tax form 8332,
Release of Claim to Exemption for Child of Divorced or
Separated Parents. Although the tax court ruled in
favor of me claiming both of the children as
deductions, I propose to you (again), that the fair
solution, in the future, is for each of us to claim one
child. Please sign this form and return it to me so
that I have the documentation that we mutually agree to
this solution.
If you choose not to sign the form 8332 that allows you
to claim M, I will exercise my right to have the
children for an additional 30 days during summer months
from now on, so that the support test is not questioned
in the future and I will claim both children. I will
also choose to fully abide by the letter of the divorce
decree, changing our weekend and holiday arrangements
so that we follow the possession guidelines as written.
No questions asked.
As per our divorce decree, I am notifying you that I
plan to have the children for an extended period of
summer possession from Saturday, July 1st, 2006 through
Thursday, July 6th, and again from Monday, July 17th
through Wednesday, August 9th, 2006. This is a total
of 30 days.
The first day of school, according to the Lander BEEN
website, is Wednesday, August 17th, 2006.
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If you decide to sign the enclosed 8332, allowing you
to claim M and me JK, I will consider renegotiating the
above 30-day possession so that the children will not
be away from you for the extended period of time during
the summer.
If you have further questions, feel free to respond.
Please let me know your decision by May 15, 2006, so
that arrangements for childcare can be made. If I do
not hear from you by this date, I will proceed as per
our divorce decree. Thank you in advance.
Petitioner timely filed her 2006 Federal income tax return
using head of household filing status. She claimed her son and
daughter as dependents for purposes of two dependency exemption
deductions and the child tax credit.
On November 21, 2008, respondent sent petitioner a notice of
deficiency disallowing the two claimed dependency exemption
deductions for the children and the child tax credit and changing
her filing status from head of household to single.
Discussion3
I. Dependency Exemption Deductions
In general, a taxpayer may deduct an exemption for a
dependent, such as a taxpayer’s qualifying child. Secs. 151(a),
(c), 152(a)(1). An individual cannot be a dependent of more than
one taxpayer. See sec. 151(d)(2).
3
We decide this case on the basis of the evidence in the
record without regard to the burden of proof. Accordingly, we
need not decide whether the general rule of sec. 7491(a)(1) is
applicable. See Higbee v. Commissioner, 116 T.C. 438 (2001).
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Section 152(c)(1) defines a “qualifying child” as an
individual:
(A) who bears a relationship to the taxpayer, such
as a child of the taxpayer;
(B) who has the same principal place of abode as
the taxpayer for more than one-half of such taxable
year; (aside from special rules applicable to divorced
or separated parents);
(C) who is under the age of 19 or is a student who
has not attained the age of 24 as of the close of the
calendar year; and
(D) who has not provided over one-half of such
individual’s own support for the calendar year in which
the taxable year of the taxpayer begins.
In pertinent part, section 152(e) provides:
SEC. 152(e). Special Rule For Divorced Parents, Etc.--
(1) In general.--Notwithstanding subsection
(c)(1)(B), (c)(4), or (d)(1)(C), if--
(A) a child receives over one-half of
the child’s support during the calendar year
from the child’s parents--
(i) who are divorced or legally
separated under a decree of divorce or
separate maintenance,
* * * * * * *
(B) such child is in the custody of 1 or
both of the child’s parents for more than
one-half of the calendar year, such child
shall be treated as being the qualifying
child or qualifying relative of the
noncustodial parent for a calendar year if
the requirements described in paragraph (2)
or (3) are met.
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* * * * * * *
(4) Custodial parent and noncustodial
parent.--For purposes of this subsection--
(A) Custodial parent.--The term
“custodial parent” means the parent having
custody for the greater portion of the
calendar year.
(B) Noncustodial parent.--The term
“noncustodial parent” means the parent who is
not the custodial parent.
Petitioner contends that she qualifies as the custodial
parent of the children for 2006 because they were in her custody
for the greater portion of that year, whether measured by the
number of nights, days, or hours they spent with her. By
contrast, respondent, who has allowed the dependency exemption
deductions to Mr. Litton for 2006, contends that the children had
the same principal place of abode as Mr. Litton for more than
half of the year and were in his custody for the greater portion
of the year and therefore are not petitioner’s qualifying
children under section 152(c)(1).
We agree with petitioner. While the statutory provisions
here may seem somewhat convoluted and confusing, we think the
special provisions of section 152(e)(1) and (4) override the
general provision of section 152(c)(1)(B) where the dependency
exemption deduction for a “qualifying child” of divorced or
separated parents is involved. Sec. 152(e)(1).
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In the case of a child of divorced parents, if a child
receives over half of his support during the year from both his
parents and is in the custody of one or both parents for more
than half of the year, then the child is treated as being the
qualifying child of the parent having custody for a greater
portion of the year. Sec. 152(e)(1), (4)(A). That parent is
referred to as the “custodial parent”. If there is split or
divided joint custody, “‘custody’ will be deemed to be with the
parent who, as between both parents, has the physical custody of
the child for the greater portion of the calendar year.” Sec.
1.152-4(b), Income Tax Regs.; see Bjelland v. Commissioner, T.C.
Memo. 2009-297; Maher v. Commissioner, T.C. Memo. 2003-85.
The resolution of this issue turns on whether petitioner had
physical custody of the children for the greater portion of 2006.
See McCullar v. Commissioner, T.C. Memo. 2003-272. In support of
her contention, petitioner relies on her detailed calendar log,
which she kept each day and which was admitted into evidence. On
that calendar log she placed the notation “kids” on each day they
were in her custody and showed the hours and nights she had them.
We find that petitioner diligently documented the times she had
physical custody of her children in her daily calendar log, which
she kept on an accurately contemporaneous basis. We were also
impressed with her candid and credible testimony.
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While there is no statutory yardstick to quantify custody in
this situation, we think the number of both days and nights
petitioner had custody of her children during the regular school
term was slightly more than those claimed by Mr. Litton in 2006.
What substantially tipped the custody scales in petitioner’s
favor was the 30-day period she had the children in her physical
custody during July and August.
Accordingly, on the basis of this record, and in view of all
the facts and circumstances herein, we conclude that petitioner
qualified as the custodial parent of her children, who were in
her physical custody for the greater portion of 2006. Therefore,
we hold that petitioner is entitled to the dependency exemption
deductions for her son and daughter in that year.
II. Child Tax Credit
Section 24(a) allows a child tax credit of $1,000 for each
qualifying child of the taxpayer. The term “qualifying child”
means a qualifying child (as defined in section 152(c)) who has
not attained the age of 17. Sec. 24(c)(1). Because M.C. and
J.K. were petitioner’s qualifying children for 2006 and neither
had attained the age of 17 during that year, we hold that
petitioner is also entitled to the child tax credit.
III. Head of Household Filing Status
Section 1(b) applies an advantageous tax rate to the taxable
income of unmarried individuals who qualify as head of a
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household. Compare sec. 1(b) with sec. 1(c) (rate generally
applicable to taxable income of unmarried individuals). Under
section 2(b)(1), the term “head of a household” includes an
individual unmarried at the end of the taxable year who, among
other things, maintains as his or her home a household which
constitutes for more than one-half of such taxable year the
principal place of abode, as a member of such household, of a
qualifying child.4 On the basis of the record, we conclude that
petitioner maintained a household which was the principal place
of abode of her children for more than half the year. Therefore,
because M.C. and J.K. are petitioner’s qualifying children, we
hold that she is entitled to use the head of household filing
status for 2006.
To reflect the foregoing,
Decision will be entered for
petitioner.
4
We note that a qualifying child for purposes of sec. 2(b)
is “determined without regard to section 152(e),” which suggests
that a custodial parent whose home is the principal place of
abode for the child for more than half the year is entitled to
head of household filing status even if he or she has released
his or her claim to the dependency exemption under sec.
152(e)(2).