Title: LESEBERG v. TAYLOR

State: wyoming

Issuer: Wyoming Supreme Court

Document:

LESEBERG v. TAYLOR2003 WY 13178 P.3d 201Case Number: 02-166Decided: 10/21/2003
OCTOBER TERM, A.D. 2003

 

                                                                                                            

 

CHRISTL 
B. LESEBERG,

f/k/a 
Christl Taylor,

 

Appellant(Defendant),

 

v.

 

CALVIN 
D. TAYLOR,

 

Appellee(Plaintiff).

 

 

Appeal 
from the District Court of Sheridan County

The 
Honorable Dan Spangler, Judge

 

Representing 
Appellant:

Richard 
W. Beckwith of Greenhalgh, Beckwith, Lemich & Stith, P.C., Rock Springs, 
Wyoming  

 

Representing 
Appellee:

            
Sheryl Smith Bunting of Kinnaird Law Office, P.C., Sheridan, Wyoming  

 

 

Before 
HILL, C.J., and GOLDEN, LEHMAN, KITE, and VOIGT, JJ.

 

KITE, 
J., delivered 
the opinion of the Court; GOLDEN, J., filed a specially concurring 
opinion

 

 

            
KITE, Justice.

 

[¶1]      Christl B. 
Leseberg (mother) appeals from the district court's order finding no substantial 
change of circumstances to warrant modifying her divorce decree to reallocate 
the dependent income tax credit from Calvin D. Taylor (father) to her.  We find no error and 
affirm.

 

 

ISSUES

 

[¶2]      The mother states 
the issues as follows:

 

I.  Did 
the district court err as a matter of law when it held that there had not been a 
change of circumstances that warranted modification of those portions of the 
parties' decree of divorce relating to allocation of the right to claim the 
parties' minor child as a dependent for income tax 
purposes?

 

A.  Is 
the allocation of the dependent tax credit modifiable?

 

B.  What 
law, if any, governs the district court in properly allocating the right to 
claim a child as a dependent for income tax purposes?

 

 

FACTS

 

[¶3]      The father and 
the mother were divorced by a decree dated April 23, 1991.  Pursuant to a stipulation entered into 
by the parties before the entry of the decree, the district court awarded 
custody of the couple's minor child to the mother and ordered the father to pay 
child support.  The stipulation and 
decree also provided the father was entitled to claim the child for income tax 
purposes so long as he remained current in his child support 
payments.

 

[¶4]      On December 10, 
2001, the mother petitioned for a modification of the divorce decree alleging, 
first, a substantial change of circumstances in that the income of both parties 
had increased since the divorce causing the child support obligation to change 
by twenty percent or more and, second, the right to claim the child for income 
tax purposes should be reallocated to her as the custodial parent pursuant to 
the Internal Revenue Service Code, 26 U.S.C.A. § 152(e).  After a hearing on May 9, 2002, the 
district court increased the monthly child support payment due from the father 
as stipulated by the parties but denied the mother's request for reallocation of 
the dependent income tax credit from the father to her.  The district court found "[t]here has 
not been a substantial change of circumstances that warrants allocation of the 
dependent income tax credit to the [mother]" and ordered the mother to "continue 
to supply [the father] with an executed Internal Revenue Service form 8332 . . . 
each year, so that he may continue to claim the parties' minor child as a 
dependent for income tax purposes."  
The mother appeals from that portion of the order. 

 

 

STANDARD 
OF REVIEW

 

[¶5]      We review a 
district court's order on a petition to modify a divorce decree under an abuse 
of discretion standard.  Fleenor 
v. Fleenor, 992 P.2d 1065, 1068 (Wyo. 1999).  The ultimate question we must decide is 
whether the district court could reasonably conclude as it did.  Metz v. Metz, 2003 WY 3, ¶6, 61 P.3d 383, ¶6 (Wyo. 
2003).

 

 

DISCUSSION

 

A.        
Modification of Provision Allocating Dependent Tax 
Credit

 

[¶6]      The mother claims 
that the portion of the divorce decree concerning the allocation of the 
dependent tax credit, like other support provisions, is subject to 
modification.  Wyo. Stat. Ann. § 
20-2-311(a) (LexisNexis 2003) provides that an action to modify a child support 
order based upon a substantial change of circumstances may be brought by a party 
at any time.  We have not previously 
considered whether that provision allows for modification of a decree provision 
allocating the dependent tax credit.  
Other courts, however, have considered the issue and have held that an 
award of or stipulation regarding the right to claim dependency exemptions is 
subject to modification in the same manner as other provisions relating to child 
support.  In re Marriage of 
Larsen, 805 P.2d 1195, 1197 (Colo. Ct. App. 1991); Bradshaw v. 
Bradshaw, 626 P.2d 752, 755 (Colo. Ct. App. 1981).  We find these decisions persuasive and 
hold that determinations concerning the allocation of the dependent tax credit 
are subject to modification under § 20-2-311(a).

 

B.        
Standard Applicable to Allocation of Dependent Tax 
Credit

 

[¶7]      The mother 
contends that no standard exists in Wyoming for allocating the dependent tax 
credit in child support determinations and this Court should either hold Wyoming 
courts are bound by § 152(e) of the Internal Revenue Code or adopt the standard 
followed in Utah for allocating the dependent tax credit in child support 
orders.  Section 152(e) of the 
Internal Revenue Code provides that the custodial parent is automatically 
entitled to the dependent tax credit unless he or she relinquishes that right in 
writing.  The Utah standard 
propounded alternatively by the mother requires the noncustodial parent to 
demonstrate he or she has a higher income than the custodial parent and provides 
the majority of support for the child.  
Allred v. Allred, 835 P.2d 974, 978 (Utah Ct. App. 1992).  It also requires the district court to 
determine that allocating the dependent tax credit to the noncustodial parent is 
in the child's best interest.  The 
mother asserts that applying either § 152(e) of the Internal Revenue Code or the 
Utah standard entitles her to the dependent tax credit.

 

            
1.         
Section 152(e) of the Internal Revenue Code

 

[¶8]      The mother 
contends that, because she is the custodial parent and has not relinquished her 
right to the dependent tax credit, she is automatically entitled to the credit 
pursuant to § 152(e).  She 
claims § 152(e) preempts state law on the issue.  This Court has not previously addressed 
the issue. 

 

[¶9]      A majority of the 
courts that have addressed the issue has held § 152(e) does not divest state 
courts of authority to allocate the dependent tax credit.  Motes v. Motes, 786 P.2d 232, 237 
(Utah Ct. App. 1989).  Among the 
reasons offered in support of that conclusion are, first, § 152(e) does not 
expressly divest state courts of their traditional power and, if Congress had 
intended to terminate the established practice of state courts requiring, in 
appropriate circumstances, a waiver of the tax credit to be signed by the parent 
having custody and receiving child support payments, it would have said so; and, 
second, the congressional record indicates Congress' intent was not to preempt 
established state law with the passage of § 152(e) but was only to address the 
Internal Revenue Service's desire not to be involved in parental disputes over 
the tax credit.  Id. at 
236.  We agree that § 152(e) does 
not preempt Wyoming courts from allocating the dependent tax credit in the same 
manner they allocate other marital assets in divorce 
proceedings.

 

            
2.         
Utah Standard

 

[¶10]   The mother contends, in the 
alternative, that Wyoming should adopt the Utah standard requiring the 
noncustodial parent to demonstrate he or she has a higher income and provides 
the majority of support for the child and a finding by the district court that 
allocating the dependent tax credit to the noncustodial parent is in the child's 
best interest.  Allred, 835 P.2d  at 978.  While Allred 
involved an appeal from a final decree rather than, as here, an appeal from an 
order on a petition to modify a decree, that distinction is of no consequence 
given our determination that allocation of the dependent tax credit is subject 
to modification in the same manner as other child support provisions.  

 

[¶11]   Modification of divorce decrees is 
appropriate in only limited circumstances.  
Pasenelli v. 
Pasenelli, 2002 WY 159, ¶9, 
57 P.3d 324, ¶9 (Wyo. 2002).  
With that standard in mind, we held:

 

"The 
party seeking modification must establish there has been a material and 
substantial change in circumstances which outweighs the interest of society in 
applying the doctrine of res judicata.  The trial court is vested with 
discretion to modify the provisions of the divorce decree and, absent a grave 
abuse of that discretion, we will not disturb its decision.  The standard we apply in review of cases 
asserting abuse of discretion as an issue is whether the trial court reasonably 
could have concluded as it did."

 

Id. 
(quoting 
Jones v. Jones, 858 P.2d 289, 291 (Wyo. 1993) (citations omitted)).

 

[¶12]   The approach we have taken in 
Wyoming balances the societal interest in the finality of judgments and the 
statutes allowing for modification of the child support provisions.  Pasenelli, 2002 WY 159, ¶9.  Our trial courts are charged with 
resolving that tension and must do so in the sound exercise of their 
discretion.  Id.  

 

 [¶13]  We are satisfied these principles 
adequately set the standard in Wyoming for modifying child support provisions, 
including allocating the dependent tax credit.  We, therefore, decline to specifically 
adopt the Utah standard as a rule to be steadfastly applied by our courts in all 
modification proceedings.  Having 
said that, however, we note our trial courts can and do consider both the 
child's best interest and the parties' relative financial positions when 
determining the respective support obligations under our statutory 
scheme.

 

[¶14]   In the present case, the parties 
stipulated the father would be entitled to the dependent tax credit so long as 
he remained current in his child support payments.  When the mother thereafter petitioned 
for a modification of the child support provisions, the parties again agreed on 
an increase in the child support amount.  
The district court then held a hearing on the issue of reallocating the 
tax credit.

 

[¶15]   The evidence showed the mother's 
income had increased since the entry of the divorce decree because she 
personally was earning more and she was married to a man who had a substantial 
income.  The evidence also showed 
the father continued to earn more than the mother personally earned without 
taking into account her husband's earnings.  The mother attempted to show she paid 
more than the father to support the child by offering evidence of the expenses 
associated with maintaining her new four-person household and dividing those 
expenses by four to come up with the figure she alleged she expended in support 
of the parties' minor child.  Even 
if this were the proper way to compute the amount of support the mother provided 
for the child, the father's income remained higher than the mother's.  Given that evidence, the district 
court's determination is sustainable under either the Utah standard or our less 
precise abuse of discretion standard.  

 

[¶16]   The district court was not 
persuaded that a substantial change of circumstances occurred justifying 
reallocation of the dependent tax credit portion of the decree.  We find nothing in the record which 
suggests the district court abused its discretion in reaching that 
result.

 

[¶17]   Affirmed.    

 

 

GOLDEN, 
J., specially concurring.

 

[¶18]      
I 
agree with the majority opinion that the allocation of the dependent tax credit 
should be determined according to Wyoming law, not federal law, and that the 
allocation may be modified in the same manner as other provisions relating to 
child support.  I do not agree, 
however, that the current state of the law provides sufficient guidance to the 
parties or the district courts on how to determine the allocation, either 
initially or upon modification.  

 

[¶19]      
Certainly 
any modification of support issues is at the discretion of the district 
court.  However, appellate review 
for abuse of discretion is hollow absent knowledge of the parameters of that 
discretion.  There are no criteria 
established by statute or this Court as to how the district court should 
exercise its discretion under these circumstances.  I would suggest, given the absence of 
legislative action, this Court should determine at least some specific criteria 
to guide the court in its use of its discretion on this issue.  I believe, at the very least, evidence 
must be presented, and considered by the trial court, relating to the effect the 
allocation of the dependent tax credit has on the financial resources of the 
parents.  The goal should be to 
maximize the financial resources available to the "family" unit and thereby 
maximize the financial resources available to support the child.  

 

[¶20]      
In 
the instant case, the parties stipulated that a substantial change in 
circumstances had occurred when they agreed to a stipulated modification of 
child support.   With regard to 
the tax deduction, Leseberg testified that when she originally agreed to the 
allocation of the tax deduction to Taylor, she was only working part time so 
Taylor benefited most from the deduction.  
Currently, she works full time, as does her new husband, and the tax 
deduction would be very meaningful for them.  Taylor testified that the benefits he 
receives from the tax deduction help him provide financial support for the 
child.  No party testified to the 
specific financial consequences to either party regarding the allocation of the 
tax deduction.

 

[¶21]      
The 
trial court found "there has not been a substantial change in circumstances that 
warrants allocation of the dependent income tax credit to" Leseberg.  The evidence does not support the 
finding of the district court that there was not a substantial change in 
circumstances.  Because, however, no 
specific financial data was entered into evidence, the evidence also does not 
support that such changed circumstances warrant a change in the allocation of 
the dependent tax credit.  It was 
mother's burden, as the party seeking modification, to introduce specific, 
verifiable financial evidence supporting the requested modification of the tax 
credit allocation.  Because she 
failed to do so, the judgment of the district court correctly is affirmed.