RENDERED: FEBRUARY 17, 2023; 10:00 A.M.

TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2021-CA-1490-MR

JAMES ERIC BANKSTON APPELLANT 

v. 

APPEAL FROM MARION CIRCUIT COURT

HONORABLE SAMUEL TODD SPALDING, JUDGE

ACTION NO. 17-CI-00076

JENNIFER S. MATTINGLY APPELLEE 

OPINION

REVERSING AND REMANDING

**   **  **

BEFORE: THOMPSON, CHIEF JUDGE; JONES AND KAREM, JUDGES.

JONES, JUDGE: The Appellant, James Eric Bankston, brings this appeal 

following entry of the November 22, 2021 order issued by the Marion Circuit 

Court (“circuit court”). The order specified that the Appellee, Jennifer S. 

Mattingly, and Bankston could each claim the parties’ minor child as a dependent 

on his/her federal income tax returns every other year on a rotating basis. On 

appeal, Bankston asserts the circuit court’s order is erroneous as a matter of law. 
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For the reasons set forth below, we reverse the circuit court and remand this 

matter. 

I. BACKGROUND

Bankston and Mattingly were never married. They have a child 

together who was born in July 2015. The parties have always had joint legal 

custody of the child, but it was not until April of 2018, that Bankston received 

equal timesharing. As noted by the circuit court under the current timesharing 

schedule the parties “essentially alternate physical custody on an equal basis.” 

However, Bankston has a considerably higher income than Mattingly, and he pays 

her monthly child support despite the fact that he has the child half of the time. 

In 2018, by agreement of the parties, Bankston was permitted to claim

the parties’ child as his dependent for purposes of his federal income taxes. 

However, thereafter, a disagreement arose as to which party would be able to do so 

going forward. On September 29, 2021, Bankston moved the circuit court to be 

able to claim the child each year as his dependent, pursuant to 26 U.S.C.1 § 152. 

Mattingly, however, requested a court order allowing her to claim the child every 

other year such that she would be able to claim the child during the years she was 

not able to claim her older child as a dependent.2 

1 United States Code. 

2 Mattingly’s older child does not belong to Bankston.
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The circuit court determined that if Bankston did not claim the child 

on his taxes his refund would be approximately $4,073 less, and that not claiming 

the child would result in Mattingly getting $4,347 less. Citing AdamsSmyrichinsky v. Smyrichinsky, 467 S.W.3d 767, 781 (Ky. 2015), the circuit court 

concluded that the Kentucky Supreme Court has directed state trial courts “to 

allocate the tax credit in a manner which will maximize the greatest financial 

benefit to the children.” 

Following what it believed to be the Supreme Court’s directive in

Adams-Smyrichinsky, the circuit court then determined:

[I]f the tax credit is alternated, each party will receive an 

increased refund of just over $4,000.00 during the year 

they claim [the child]. Because the parties share joint 

custody and are exercising timeshare on an equal basis, 

the Court concludes, pursuant to Smyrichinsky, that the 

tax credit should be alternated. [Bankston] will claim 

[the child] during the taxable years when [Mattingly] is 

claiming her older child. When [Mattingly] is not 

claiming her older child, she shall claim [the child] for 

tax credit purposes.

November 22, 2021 Order at 2. 

II. ANALYSIS

“Giving a party the tax exemption is simply a property award, not 

directly a matter of setting support, since it affects the amount of money the parent 

enjoying the exemption takes home.” Adams-Smyrichinsky, 467 S.W.3d at 781. 

Whether a party is entitled to the exemption is primarily a matter of federal law; 
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however, as discussed in greater detail below, in certain situations, the family court 

may order the parties to execute a waiver allowing one or the other to claim the 

child on his or her taxes. Id.

“A taxpayer may claim a dependency deduction for a child . . . only if 

the child is the qualifying child of the taxpayer[.]” 26 C.F.R.3 § 1.152-4(a). To be 

a qualifying child of the taxpayer, the child must have “the same principal place of 

abode as the taxpayer for more than one-half of such taxable year.” 26 U.S.C. § 

152(c)(1)(B). “A child is in the custody of one or both parents for more than onehalf of the calendar year if one or both parents have the right under state law to 

physical custody of the child for more than one-half of the calendar year.” 26 

C.F.R. § 1.152-4(c). 

Thus, the first determination is whether the child was in the custody of 

either Bankston or Mattingly for more than one-half of the calendar year. The 

circuit court determined that the parties have equal timesharing, and that the child 

does not reside with either parent more than the other. In such situations, 26 

U.S.C. § 152(c)(4)(B)(ii) applies. This section explicitly addresses situations, like 

the present, where two or more taxpayers appear eligible to claim the same 

qualifying child under the general custody rules. It provides that “if the child 

resides with both parents for the same amount of time during such taxable year, the 

3 Code of Federal Regulations. 
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parent with the highest adjusted gross income” shall be treated as the parent of the 

qualifying child. Thus, under the federal tax code, Bankston should be entitled to 

claim child as his qualifying child, for any year in which he has a higher adjusted 

gross income than Mattingly. 

However, the IRS4regulations provide that the noncustodial parent 

may claim the child 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.

26 U.S.C. § 152(e)(2). The custodial parent can be ordered to execute the 

exemption “under threat of contempt from a state court that has assigned the 

exemption to the noncustodial parent.” Adams-Smyrichinsky, 467 S.W.3d at 782. 

The circuit court appears to have read Adams-Smyrichinsky as 

requiring it to allocate the tax deduction between the two parties. This is not what 

the Court actually held. The federal income tax code allocates the tax deduction. 

And, in this case, it gives the award to the party with the higher adjusted gross 

income. The circuit court was not required to look beyond this rule and order that 

4

Internal Revenue Service.
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party to execute a release in favor of the other party. What the AdamsSmyrichinsky Court actually held was that the circuit court can do so but only if it 

determines first that there are extraordinary reasons that compel disregarding the 

normal IRS rules. In other words, the circuit court should presume that the IRS 

rules apply, and it should not displace those rules simply for the sake of fairness or 

achieving mathematical equality between the parties. 

Such orders require “the state trial court to meet the heavy burden of 

stating sound reasons [on the record] that this award actually serves as a support 

issue benefitting the child.” Id. at 784. “[I]f the court cannot articulate a sound 

reason for why awarding the exemption to the noncustodial parent actually benefits 

the child, and thus affects the child’s support, then it is not making a support 

award in the first instance, and it simply should not be done.” Id. (emphasis 

added). 

The Court explained:

Discretion, even in determining equity, or best interests,

must have a reasonable and meaningful basis if we are

not to undermine the integrity of judicial decisions and

thereby erode public faith in the judiciary. To that end, a

state court must do more than . . . simply divide the

exemptions, or simply alternate years. There is no

judgment in such an award, and no true finding of how it

is in a child’s best interest, or how the extra money

saved from taxes in one parent’s household actually

benefits the child. . . . Otherwise, this is simply arbitrary

action.
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Id. at 784 (emphasis added).

It appears from the record that Bankston qualified for the tax 

deduction not Mattingly. The circuit court’s order that the parties alternate years is 

not the IRS rule. In cases where the parties have roughly equal timesharing, the 

IRS rule dictates that the deduction belongs to the party with the higher adjusted 

gross income. Here, the circuit court made a determination what the deduction 

would mean for each parent’s finances, but it did not make a determination what 

it would mean to this child. Absent from the circuit court’s analysis is the critical 

discussion of “how the extra money saved from taxes in one parent’s household 

actually benefits th[is] child.” This could very well differ from Bankston to 

Mattingly, especially since Mattingly has other children that might dilute the 

benefit to this child. 

“The trial court cannot award the exemption like a piece of property 

and thereby bind third parties, like the IRS, by its orders; the court can only order 

the ‘custodial parent’ to sign a waiver in favor of the noneligible party for a stated, 

sound reason reliably related to the support of the child.” Id. at 784-85 (emphasis 

added). “Because the [circuit] court did not state a reasonable nexus to support 

assigning the exemption to [Mattingly for the alternating years] the [Marion 

Circuit] Court abused its discretion.” Id.
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III. CONCLUSION

Accordingly, for the foregoing reasons, the order of the Marion 

Circuit Court awarding the dependent-child tax deduction to the parties on 

alternating years is reversed, and this matter is remanded to the circuit court for 

entry of any and all appropriate orders. 

ALL CONCUR.

BRIEF FOR APPELLANT:

Robin C. Bennett

Lebanon, Kentucky

BRIEF FOR APPELLEE:

Dallas E. George

Lebanon, Kentucky