Frazier v. Frazier

HUNSTEIN, Presiding Justice,

dissenting.

Because I would hold that the trial court was without authority to allocate the federal tax exemption, I dissent.

In Blanchard v. Blanchard, 261 Ga. 11 (401 SE2d 714) (1991), this Court held that Georgia courts do not have authority to award the federal dependent child tax exemption to a non-custodial parent. We reached this conclusion because to hold otherwise would cause the State to exercise a taxation power it does not possess, eliminate the desirable object of certainty, one of the objects of the federal statute in *692question, and add to the burdens of the superior courts in making case-by-case determinations and by having to police the tax-paying behavior of the parties by use of the contempt power. This decision was reaffirmed in Bradley v. Bradley, 270 Ga. 488 (512 SE2d 248) (1999). Thus, this Court has twice determined that it is improper for courts of this State to allocate the dependency exemption because in doing so the State court would be exercising a taxation power it does not possess.

Reaching an opposite result in this appeal, the majority ignores the rationale of Bradley and Blanchard and holds that State courts may allocate the federal dependency exemption where parents are awarded joint custody and the time spent with each parent is, “so far as is practicable, equal.” Such distinction is of no relevance, however, to the issue of the trial court’s authority to allocate the federal tax exemption. Regardless of the nomenclature used to describe a custody arrangement or this Court’s calculations of the amount of time a parent spent with a child, Georgia courts are without authority to impose a federal tax liability. As stated by the United States Supreme Court in Burnet v. Harmel, 287 U. S. 103, 110 (53 SC 74, 77 LE 199) (1932), State courts may create legal interests in custody decisions by granting custody to one or both parents, but “the federal [tax] statute determines when and how [such interests] shall be taxed.”

The majority further errs in its determination that the trial court was authorized to allocate the federal tax exemption to Husband because IRC § 152 (e) (4) (A) does not provide for the allocation of the exemption where one parent has custody of the children for 47% of the calendar year. It is undisputed in this case that Husband had custody of the children at most only 47% of the time. “Custodial parent” is defined under 26 USC § 152 (e) (4) (A) as the “parent having custody for the greater portion of the calendar year.” Recognizing that divorcing parents often are awarded shared or split custody, federal regulations interpreting § 152 (e) (4) specifically provide that in the event of a shared custody arrangement, “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.” 26 CFR § 1.152-4 (b). By their very terms, therefore, the federal tax code and applicable regulations do not grant State trial courts the authority to allocate the exemption in situations where the time children spend with their parents is, “so far as is practicable, equal.” Rather, regardless of the type of custody arrangement, they require that a specific factual inquiry be made and that the exemption be allocated to the parent spending a greater portion of the calendar year with the child.2 *693See McCullar v. Commr., T.C.Memo. 2003-272 (whereparents awarded joint custody, dependency exemption rested with father because daughter resided with him for over 50% of the year).

Decided June 26, 2006. Celeste F. Brewer, for appellant. Karlise Y. Grier, for appellee. I am authorized to state that Chief Justice Sears joins in this dissent.

The majority’s holding allowing State trial courts to arbitrarily allocate the exemption *693away from the custodial parent in a joint custody arrangement also ignores decades of reasoned opinions by the United States Tax Court that have held that the dependency exemption in joint custody situations depends not on the discretion of the trial court, but rather on this factual inquiry. See Neal v. Commr., T.C. Memo. 1999-97; Dumke v. Commr., T.C. Memo. 1975-91 (affirmed without published opinion 524 F2d 1230 (5th Cir. 1975)). Even where one parent has sole physical custody, the Tax Court has held that such parent is not entitled to the dependency exemption if the child did not live with him or her for the greater portion of the year. See Otimishi v. Commr., T.C. Memo. 1980-472.