T.C. Summary Opinion 2012-121
UNITED STATES TAX COURT
JACKSON M. BROWNING, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7312-10S. Filed December 20, 2012.
Jackson M. Browning, pro se.
Tamara L. Kotzker and Robert A. Varra, for respondent.
SUMMARY OPINION
GALE, 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
1
Unless otherwise indicated all section references are to the Internal Revenue
Code of 1986 as in effect for the year at issue and all Rule references are to the Tax
(continued...)
-2-
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.
Respondent determined a $3,250 deficiency in petitioner’s 2007 Federal
income tax. The issues for decision are whether petitioner is entitled to a
dependency exemption deduction, a child tax credit, and a dependent care credit for
his son for the 2007 taxable year.
Background
Some of the facts have been stipulated and are so found. The stipulation of
facts, supplemental stipulation of facts, and accompanying exhibits are incorporated
herein by this reference.
Petitioner’s son, H.B., was born in 2004.2 Petitioner and H.B.’s mother,
Dane Gallardo, never married and were living separately throughout 2007.
Permanent orders issued by the District Court, Adams County, Colorado (State
court), following a hearing held on May 7, 2007, adjudicated petitioner the natural
father of H.B., granted him 38 hours of regular parenting time per week and
additional parenting time on specified holidays, and ordered him to pay monthly
1
(...continued)
Court Rules of Practice and Procedure. All dollar amounts are rounded to the
nearest dollar.
2
Pursuant to Rule 27(a)(3) we refer to minor children by their initials.
-3-
child support to Ms. Gallardo. Petitioner and Ms. Gallardo had split the custody of
H.B. evenly before May 2007 and strictly abided by the custody provisions of the
permanent orders thereafter. Thus, Ms. Gallardo had custody of H.B. for the greater
portion of 2007.
The permanent orders required petitioner and Ms. Gallardo to alternate
claiming the “tax dependency exemption” for H.B. They granted petitioner the right
to claim the exemption for 2007 and succeeding odd-numbered years and Ms.
Gallardo the right to claim the exemption for 2008 and succeeding even-numbered
years. Petitioner was not entitled to claim H.B. as a dependent for a given year
unless he had paid all court-ordered child support for that year. The permanent
orders were signed by Ms. Gallardo’s attorney indicating they were “approved as to
form” but not by Ms. Gallardo personally.
Petitioner timely filed his Federal income tax return for 2007. Therein, he
claimed with respect to H.B. a dependency exemption deduction of $3,400; a
$1,000 child tax credit; and a $2,400 dependent care credit. Petitioner did not
submit a Form 8332, Release of Claim to Exemption for Child of Divorced or
-4-
Separated Parents, with his return, nor did he ask Ms. Gallardo to execute such a
form before filing his return.3
On December 28, 2009, respondent timely issued to petitioner a notice of
deficiency wherein he disallowed the dependency exemption deduction, child tax
credit, and dependent care credit claimed by petitioner for 2007 with respect to H.B.
and determined a $3,250 deficiency.4
In early 2011 petitioner asked Ms. Gallardo to execute a Form 8332 for 2007.
By letter to petitioner dated February 1, 2011, Ms. Gallardo’s attorney took the
position that Ms. Gallardo was not obligated to execute a Form 8332 for 2007
because petitioner had not paid all the child support required by the permanent
orders. In an effort to compel Ms. Gallardo to execute the form petitioner sought a
3
As discussed infra, Form 8332 is the document by which a parent entitled to
a dependency exemption by virtue, inter alia, of having custody of a child for the
greater portion of a calendar year (the “custodial parent”) can release his or her
claim to a dependency exemption to the other parent (the “noncustodial parent”).
See sec. 152(e)(2), (4); sec. 1.152-4(e)(1), Income Tax Regs.
4
We note that the amount of the credits disallowed on the face of the notice of
deficiency ($3,400) exceeds the determined deficiency ($3,250). A Form 4549,
Income Tax Examination Changes, accompanying the notice of deficiency credits
petitioner with reporting $1,602 of total tax due on his return; however, the copy of
petitioner’s return stipulated by the parties reports total tax due of $942. A
Schedule of Adjustments attached to the notice of deficiency indicates that the $660
discrepancy likely resulted from respondent’s treating petitioner as having claimed a
dependent care credit of $1,740 rather than the $2,400 shown on the return.
-5-
remedial contempt order from the State court that would direct Ms. Gallardo to
execute a Form 8332 for 2007 with respect to the dependency exemption claim for
H.B.
Action on petitioner’s request for a remedial contempt order was pending at
the time of trial in this case. After the trial in this case, on the day set by the State
court for the hearing on remedial contempt, Ms. Gallardo executed a Form 8332 on
which she agreed not to claim an exemption with respect to H.B. for 2007. The
form, on which Ms. Gallardo’s signature is dated June 27, 2012, was received into
evidence pursuant to the parties’ stipulation.
Discussion
I. Dependency Exemption Deduction
Section 151(a) and (c) allows taxpayers an annual exemption deduction for
each “dependent” as defined in section 152. A dependent is either a “qualifying
child” or a “qualifying relative”. Sec. 152(a).
An individual who meets the four requirements in section 152(c)(1)(A)-(D)
with respect to a taxpayer is a qualifying child of that taxpayer. The pertinent factor
in this case is the residence requirement: to be a qualifying child the individual must
have the same principal place of abode as the taxpayer for more than one-half of the
taxable year. Sec. 152(c)(1)(B). H.B. did not reside with petitioner for more than
-6-
one-half of 2007. Accordingly, H.B. was not petitioner’s qualifying child under
section 152(c) for that year.
An individual who meets the four requirements in section 152(d)(1)(A)-(D)
with respect to the taxpayer is a qualifying relative. The two pertinent requirements
here are that (1) the taxpayer must provide over one-half of the individual’s support
for the taxable year and (2) the individual must not be a qualifying child of the
taxpayer or any other taxpayer for the taxable year. Sec. 152(d)(1)(C) and (D).
Petitioner did not prove that he provided over one-half of H.B.’s support in 2007.
He also failed to establish that H.B. was not the qualifying child of another taxpayer
for 2007, e.g., Ms. Gallardo. Accordingly, H.B. was not petitioner’s qualifying
relative under section 152(d).
However, section 152(e) provides a special rule for parents who are
seperated, divorced, or living apart for the last six months of the calendar year under
which a child can be treated as the qualifying child or qualifying relative of the
noncustodial parent5 notwithstanding the residence requirement of section
152(c)(1)(B) or the support requirement of section 152(d)(1)(C). Under section
5
Because Ms. Gallardo had custody of H.B. for the greater portion of 2007,
she was the custodial parent, and petitioner was the noncustodial parent, for that
year. See supra note 3.
-7-
152(e)(1) and (2)(A) and (B), a child that receives over one-half of his support
during the calendar year from his parents, and is in the custody of one or both of
his parents for more than one-half of the calendar year,6 shall be treated as the
qualifying child of 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.
The Internal Revenue Service (IRS) issued Form 8332 to standardize the written
declaration required by section 152(e)(2)(A).7 See Nixon v. Commissioner, T.C.
Memo. 2011-249. The temporary regulation applicable for a taxable year
beginning in 2007 required that a noncustodial parent claiming a dependency
exemption under section 152(e)(2) attach to his or her return either a completed
6
We are satisfied, on the basis of petitioner’s testimony and the terms of the
permanent orders, that H.B. received over one-half of his support from, and resided
for more than one-half of the calendar year with, his parents during 2007.
Respondent does not contend otherwise.
7
Form 8332 requires: (1) the name of the child; (2) the signature of the
custodial parent confirming his or her consent not to claim an exemption for the
child; (3) the year(s) for which the claim is being released; (4) the date of the
custodial parent’s signature; (5) the custodial parent’s Social Security number; and
(6) the name and Social Security number of the noncustodial parent. See Miller v.
Commissioner, 114 T.C. 184, 190 (2000).
-8-
Form 8332 or a document conforming to the substance of Form 8332.8 Sec. 1.152-
4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg. 34459 (Aug. 31,
1984).9
Before its amendment in 1984, section 152(e) allowed a noncustodial parent
to claim a child as a dependent if he or she provided a threshold amount of support
for the child during the taxable year and the custodial parent failed to clearly
establish that he or she provided more support than the noncustodial parent. See
Deficit Reduction Act of 1984, Pub. L. No. 98-369, sec. 423(a), 98 Stat. at 799;
H.R. Rept. No. 98-432 (Part 2), at 1498 (1984), 1984 U.S.C.C.A.N. 687, 1139;
H.R. Conf. Rept. No. 98-861, at 118 (1984), 1984-3 C.B. (Vol. 2) 1, 372. The
former rule often presented difficult problems of proof and substantiation and
caused the IRS to become involved in disputes between parents over levels of
8
The State court permanent orders are not a valid substitute for a Form 8332
in this case because they do not bear Ms. Gallardo’s signature, but only her
attorney’s, approving the documents as to form. See Miller v. Commissioner, 114
T.C. at 192-193.
9
The temporary regulation was replaced by a permanent regulation effective
for taxable years beginning after July 2, 2008. T.D. 9408, 2008-2 C.B. (Vol. 1)
323, 329; see also sec. 1.152-4, Income Tax Regs. The permanent regulation
similarly requires a noncustodial parent claiming a dependency exemption to attach
a completed Form 8332 or conforming document to his or her return; however,
under the permanent regulation, a written declaration not on a Form 8332 must be a
document executed for the sole purpose of serving as a written declaration under
sec. 1.152-4, Income Tax Regs.
-9-
support. H.R. Rept. No. 98-432 (Part 2), supra at 1498-1499, 1984 U.S.C.C.A.N.
at 1139-1140. Congress amended section 152(e) to provide the exemption to the
custodial parent (without regard to the parents’ relative support) unless the custodial
parent expressly waives his or her right to the exemption in writing, thereby
providing a bright-line rule which did not require IRS involvement in support
disputes. Id. at 1499, 1984 U.S.C.C.A.N. at 1140; see also Armstrong v.
Commissioner, 139 T.C. ___, ___ (slip op. at 14) (Dec. 19, 2012). Consistent with
congressional intent we have required strict adherence to section 152(e)(2) and the
applicable regulations. See Miller v. Commissioner, 114 T.C. 184, 196 (2000).
Section 152(e)(2) provides that a noncustodial parent may claim the
dependency exemption for a child if the noncustodial parent attaches the custodial
parent’s signed, written waiver (in a form prescribed by regulations) to his or her
return for the taxable year. We have concluded in a number of cases that a
noncustodial parent who fails to attach a Form 8332 to his or her return as filed is
ineligible to claim the dependency exemption. See Santana v. Commissioner, T.C.
Memo. 2012-49; Espinoza v. Commissioner, T.C. Memo. 2011-108; Chamberlain
v. Commissioner, T.C. Memo. 2007-178; Brissett v. Commissioner, T.C. Memo.
2003-310; Paulson v. Commissioner, T.C. Memo. 1996-560; Presley v.
Commissioner, T.C. Memo. 1996-553. Here, petitioner did not obtain a signed
-10-
Form 8332 from Ms. Gallardo until June 27, 2012,10 after she had already claimed
the dependency exemption for H.B. and the period of limitations for her 2007
taxable year had almost certainly closed.11 Thus, allowing petitioner the deduction
at this juncture would result in the dependency exemption for H.B. having been
deducted twice for 2007.
For the foregoing reasons, we conclude that petitioner has not satisfied the
requirements of section 152(e)(2) and is therefore not entitled to claim a dependency
exemption for H.B. for 2007.
II. Child Tax Credit
Section 24(a) allows a credit for each “qualifying child” of a taxpayer. A
“qualifying child” for this purpose is a qualifying child as defined in section
152(c) who has not attained the age of 17. Sec. 24(c)(1). Since we have
determined above that H.B. was not petitioner’s qualifying child for 2007 within
the meaning of section 152(c), even as augmented by the special rule of section
10
In contrast, the document signed by the custodial parent in Armstrong v.
Commissioner, 139 T.C. ___, ___ (slip op. at 4-5) (Dec. 19, 2012), existed at the
time the noncustodial parent filed his return, but was not submitted with the return.
11
Respondent contends that the period of limitations for Ms. Gallardo’s 2007
taxable year has closed and that she claimed a dependency exemption for H.B. for
that year. Petitioner has not disputed the foregoing.
-11-
152(e), it follows that petitioner is not entitled to a child tax credit for H.B for
2007.12 See Himes v. Commissioner, T.C. Memo. 2010-97.
III. Dependent Care Credit
Section 21 allows a credit to taxpayers with respect to whom there are one
or more “qualifying individuals” equal to a percentage of the “employment-related
expenses” paid by the taxpayer during the taxable year. For purposes of section
21 a “qualifying individual” includes a dependent (as defined in section 152(a)(1))
who has not attained age 13. Sec. 21(b)(1). Generally, “employment-related
expenses” include expenses for household services and care of a qualifying
individual incurred to enable the taxpayer to be gainfully employed. Sec. 21(b)(2).
Because we have determined that H.B. was not petitioner’s dependent under
section 152 for 2007, even taking into account the special rule of section 152(e)
for parents living apart, petitioner is not entitled to a credit under section 21.
Moreover, even if H.B. had qualified as petitioner’s dependent under the special
12
While the cross-reference in sec. 24(c)(1) to sec. 152(c) does not expressly
incorporate the special rule of sec. 152(e), the legislative history shows that
Congress intended such an incorporation. See H.R. Conf. Rept. No. 108-696, at 62-
65 (2004), 2004 U.S.C.C.A.N. 1029, 1057-1060; Staff of J. Comm. on Taxation,
General Explanation of Tax Legislation Enacted in the 108th Congress, at 127-128
(J. Comm. Print 2005).
-12-
rule of section 152(e), the dependent care credit is available only to the custodial
parent in these circumstances. See sec. 21(e)(5).
IV. Conclusion
While the result with respect to the dependency exemption and child tax
credit may seem harsh in this case, given that petitioner was entitled under the terms
of the State court’s permanent orders to have Ms. Gallardo provide to him a Form
8332 on a timely basis, her failure to do so cannot be remedied in this proceeding.
We are a court of limited jurisdiction, generally lacking equitable powers, and must
apply the Federal tax statutes and regulations as written. As previously discussed,
section 152(e) was intended by Congress to preclude the IRS (and the Federal
courts) from becoming embroiled in disputes between parents over child support
issues and the like. Petitioner’s remedy, if any, for Ms. Gallardo’s failure to comply
with the permanent orders by providing him with a timely executed Form 8332 lies
with the State court. Accordingly, we sustain the deficiency respondent determined
in petitioner’s 2007 income tax.
To reflect the foregoing,
Decision will be entered for
respondent.