T.C. Summary Opinion 2005-153

UNITED STATES TAX COURT

BENSON B. BERRY AND MELISSA WELLS-BERRY, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 21475-03S. Filed October 17, 2005.

Benson B. Berry, pro se.

Amy Dyar Seals, for respondent.

GOLDBERG, Special Trial Judge: This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed. The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority. Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code 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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1Petitioners claimed exemptions for BB and WW (the Court

uses only the minor children’s initials) on their 2001 Federal

income tax return, both of which were disallowed in the notice of

deficiency. At trial, respondent conceded that petitioners were

allowed to claim the dependency exemption deduction with respect

to WW, and that they were entitled to the child tax credit for

taxable year 2001 with respect to WW. As a result of

respondent’s concessions, the deficiency for taxable year 2001

now in controversy is $1,398. 

Respondent determined a deficiency in petitioners’ Federal

income tax of $2,992 for the taxable year 2001.

After concessions,1 the issues for decision are: (1)

Whether petitioners are entitled to claim a dependency exemption

deduction for petitioner Benson B. Berry’s son, BB, from a

previous marriage; and (2) whether petitioners are entitled to a

child tax credit for taxable year 2001 with respect to BB.

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. Petitioners resided in

Rock Hill, South Carolina, on the date the petition was filed in

this case. Benson B. Berry (petitioner) appeared before the

Court and presented petitioners’ case. Petitioner wife, Melissa

Wells-Berry, did not appear.

On July 3, 1975, petitioner and Ernestine Berry (Ernestine)

were married. During the marriage, petitioner and Ernestine had

four children; only one child of the marriage, BB, is at issue in

the case at bar.
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Petitioner and Ernestine were divorced on May 29, 1991, by a

Final Divorce Decree entered by the Family Court of the Third

Judicial Circuit of Sumter County, South Carolina. The divorce

decree states, in pertinent part:

Before proceeding, Counsel advised the Court that the

parties had entered into an agreement which resolved all of

the issues before the Court except the issue of divorce and

the issue of attorneys fees. The agreement was recited as

follows:

1. Mrs. Berry would retain the sole care, custody and

control of the parties’ four children. Mr. Berry would have

reasonable and liberal visitation with them, including one

week at the beginning and end of each Summer, provided such

was acceptable to the children.

2. Mr. Berry would pay child support in the amount of

$625.00 per month to Mrs. Berry, by direct military

allotment, beginning June 1, 1991, and monthly thereafter.

On or about October 15, 1995, the Family Court of the Third

Judicial Circuit of Sumter County, South Carolina, entered a

Qualified Domestic Relations Order (QDRO) with respect to

petitioner and Ernestine’s divorce. The QDRO states, in

pertinent part:

This matter was before the Court pursuant to a

complaint filed by the Plaintiff requesting a reduction in

child support. The Defendant [Ernestine] filed an answer

seeking an increase in child support, alimony, interest in

the Plaintiff’s [petitioner’s] military retirement and

attorney’s fees. * * * 

Based upon the testimony presented, the Court makes the

following findings of fact:

CHILD SUPPORT

The Court finds that the Plaintiff [petitioner] is

entitled to reduction in his child support payments. There
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are two minor children remaining in the home. The parties

also have an 18 year old daughter who is now pregnant and

she has completed high school. The Court finds that the 18

year old is emancipated and should not be considered for

purposes of determining child support. The Plaintiff

[petitioner] has a gross monthly income of $3,000 per month. 

The Defendant [Ernestine] earns $528.00 per month from a

part-time job at Target. She recently became employed at

Harris Teeter and works approximately 35 hours per week at

the rate of $7.50 per hour. The Defendant’s [Ernestine’s]

gross monthly income is $1,665.50. The parties have a

combined gross monthly income of $4,664.50. According to

the South Carolina Child Support Guidelines, the monthly

child support obligation for two children when the parties

have a combined gross monthly income of $4,665.50, is

$882.00 per month. The Plaintiff [petitioner] will be given

credit for $35.00 per month he pays for health insurance on

the minor children. The total monthly combined child

support obligation is $917.00 per month. The Plaintiff’s

[petitioner’s] proportional share of the combined monthly

child support obligation is 64% or $586.80 less $35.00 for

health insurance for a total of $551.88 per month. The

reduction in child support will begin on October 1, 1996,

and continue each month thereafter until further order of

the Court.

The QDRO did not modify the custody provision of the Final

Divorce Decree.

During taxable year 2001, petitioner was retired from

military service and was employed as a store manager for Bi-Lo. 

Petitioner paid child support to Ernestine in the amount of $497

per month during taxable year 2001. Petitioner also paid for

health insurance for BB during taxable year 2001.

Ernestine was employed full-time by Harris Teeter as a

cashier during tax year 2001. She reported on her 2001 Federal

income tax return gross income of $12,411. According to the
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final divorce decree, Ernestine had both physical and legal

custody of BB during taxable year 2001.

On or about February 19, 2002, petitioners filed their Form

1040, U.S. Individual Income Tax Return, for the 2001 taxable

year. In their return, petitioners claimed BB as their dependent

and claimed the resulting dependency exemption deduction, as well

as the resulting child tax credit. There was no attachment

regarding any waiver or declaration, such as a Form 8332, Release

of Claim to Exemption for Child of Divorced or Separated Parents,

executed by Ernestine stating that she was releasing her claim to

the exemption deduction for BB. In fact, Ernestine at no time

gave petitioner verbal or written permission to claim BB as his

dependent for the taxable year 2001. 

Discussion

In general, the Commissioner’s determination set forth in a

notice of deficiency is presumed correct, and the taxpayer bears

the burden of showing that the determination is in error. Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). As one

exception to this rule, section 7491(a) places upon the

Commissioner the burden of proof with respect to any factual

issue relating to liability for tax if the taxpayer maintained

adequate records, satisfied the substantiation requirements,

cooperated with the Commissioner, and introduced during the Court

proceeding credible evidence with respect to the factual issue. 
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Although neither party alleges the applicability of section

7491(a), we conclude that the burden of proof has not shifted to

respondent with respect to either the claimed dependency

exemption deduction or the claimed child tax credit. Therefore,

petitioner bears the burden of showing that he correctly claimed

both the dependency exemption deduction for BB along with the

child tax credit with respect to BB.

1. Deduction for Dependency Exemption

A taxpayer may claim a dependency exemption for a child as

long as the child meets the statutory definition of “dependent”. 

Secs. 151(c)(1), 152(a)(1). Ordinarily, a taxpayer may claim a

child as a dependent for a particular calendar year only if the

taxpayer provides over half of the child’s support during that

calendar year. See sec. 152(a). However, special rules

determine which parent may claim a minor child as a dependent

where the parents are divorced or separated. See sec. 152(e).

Prior to 1985, the definition of dependent led to

substantial controversy in cases involving divorced or separated

taxpayers because determining which parent provided over one-half

of a child’s support presented difficult issues of proof and

substantiation. See H. Rept. 98-432 (Part 2), at 1498 (1984). 

In 1984, Congress amended section 152(e) to simplify the rules

for determining which parent properly may claim the dependency
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exemption for Federal income tax purposes. See Deficit Reduction

Act of 1984, Pub. L. 98-369, sec. 423(a), 98 Stat. 799.

The pertinent parts of section 152(e) as amended provide:

Sec. 152(e). Support Test in Case of Child of Divorced

Parents, Etc.--

(1) Custodial parent gets exemption.--Except as

otherwise provided in this subsection, if--

(A) a child (as defined in section 151(c)(3))

receives over half of his support during the

calendar year from his parents--

(i) who are divorced or legally

separated under a decree of divorce or

separate maintenance,

(ii) who are separated under a written

separation agreement, or

(iii) who live apart at all times during

the last 6 months of the calendar year, and

(B) such child is in the custody of one or

both of his parents for more than one-half of the

calendar year,

such child shall be treated, for purposes of subsection (a),

as receiving over half of his support during the calendar

year from the parent having custody for a greater portion of

the calendar year (hereinafter in this subsection referred

to as the “custodial parent”).

(2) Exception where custodial parent releases

claim to exemption for the year.--A child of parents

described in paragraph (1) shall be treated as having

received over half of his support during a calendar

year from 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
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2In this opinion, we refer to the parent having physical

custody for the greater part of the year as the custodial parent

and to the parent who is not the custodial parent as the

noncustodial parent. See sec. 152(e) (flush language).

(B) the noncustodial parent attaches such

written declaration to the noncustodial parent’s

return for the taxable year beginning during such

calendar year.

For purposes of this subsection, the term “noncustodial

parent” means the parent who is not the custodial parent.

Under section 152(e) as amended, the custodial parent2 is

entitled to claim the dependency exemption with respect to his or

her child unless one of three exceptions applies, none of which

are at issue in the case at bar. See sec. 152(e); Hughes v.

Commissioner, T.C. Memo. 2000-143; Brignac v. Commissioner, T.C.

Memo. 1999-387; sec. 1.152-4T(a), Q&A-2, Temporary Income Tax

Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984). Custody is determined

by the terms of the most recent decree of divorce or subsequent

custody decree, and “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. 

Petitioner testified at trial that during taxable year 2001,

BB resided with him during the entire summer of 2001 and on

weekends and holidays during the school year. Petitioner did not

present any documentation to substantiate such a claim. 
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Petitioner further testified that he supplied 99 percent of

the entire amount of support which BB received during taxable

year 2001. Petitioner paid Ernestine $497 per month in child

support for BB, during taxable year 2001, and he paid for BB’s

health insurance. Petitioner also testified that he bought all

of BB’s clothes and school supplies.

However, Ernestine testified that BB did not reside with

petitioner for the entire summer of 2001 and that BB only resided

with petitioner, during the year in issue, on occasional weekends

and during a week-long vacation over the summer. 

Upon the basis of the record and the final divorce decree,

we conclude that Ernestine had both legal custody and physical

custody, for more than one-half of the calendar year, of BB

during taxable year 2001. Therefore, she was the custodial

parent in 2001, and petitioner was the noncustodial parent. 

Thus, the general rule of section 152(e) applies, and Ernestine

as the custodial parent is treated as supplying over one-half of

BB’s support during the taxable year 2001, even if the

noncustodial parent actually provided over half of the child’s

support during the year. Respondent’s determination on this

issue is sustained.

2. Child Tax Credit

Section 24(a) authorizes a child tax credit with respect to

each “qualifying child” of the taxpayer. The term “qualifying
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child” is defined in section 24(c). As relevant here, a

“qualifying child” means an individual with respect to whom the

taxpayer is allowed a deduction under section 151. Sec.

24(c)(1)(A).

We have already held that petitioners are not entitled to

the dependency exemption deduction under section 151 for BB. 

Accordingly, BB is not considered a “qualifying child” within the

meaning of section 24(c). It follows, therefore, that

petitioners are not entitled to a child tax credit under section

24(a) with respect to BB.

In view of the foregoing, we sustain respondent’s

determination on this issue.

Furthermore, we have considered all of the other arguments

made by petitioners, and, to the extent that we have not

specifically addressed them, we conclude they are without merit.

Reviewed and adopted as the report of the Small Tax Case

Division.

Decision will be entered

under Rule 155.