TAX COURT OPINION

Case: James Michael Warren
Docket Number: 579-12S
Judge: Paris
Opinion Type: bench
Filed: 06/09/2014
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 JAMES MICHAEL WARREN, Petitioner(s), ) ) ) ) ) v. ) Docket No. 579-12S. ) COMMISSIONER OF INTERNAL REVENUE, ) Respondent - ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Elizabeth Crewson Paris at Kansas City, Missouri, on April 9, 2014, containing her oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Elizabeth Crewson Paris Judge Dated: Washington, D.C. June 9, 2014 SERVED JUN 1 0 2014 Capital Reporting Company 3 1 Bench Opinion by Judge Elizabeth Crewson Paris 2 April 9, 2014 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 James Michael Warren v. Commissioner Docket No. 579-12S I THE COURT HAS DECIDED TO RENDER ORAL FINDINGS OF FACT AND OPINION IN THIS CASE, .AND THE FOLLOWING REPRESENTS THE COURT'S ORAL FINDINGS OF FACT AND OPINION. THE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE. II. This proceeding was heard as a Small Tax Case pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as ame.nded, and Rules 170 through 175 of the Tax Court Rules of Practice and Procedure. III. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Hereinafter in this bench opinion, all section numbers refer to Internal Revenue Code, as amended and in effect for 2009, the taxable year in issue, and all Rule numbers refer to the Tax Court Rules of 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 4 1 2 3 4 Practice and Procedure. IV. Michael L. Boman and Silya Siniawksi appeared on behalf of James Michael Warren, petitioner. 5 Christina L. Holland appeared on behalf of 6 7 8 9 10 11 respondent. V. Respondent issued to petitioner a notice of deficiency for tax year 2009 reflecting a Federal income tax deficiency of $1,547 and no additions to tax or penalties. The issues for decision by the 12 Court are as follows: (1) whether petitioner is 13 14 15 16 17 18 19 20 21 22 23 24 entitled to a dependency exemption for minor child TW for tax year 2009; and (2) whether petitioner is entitled to a child tax credit for that dependent for tax year 2009. VI. Some of the facts have been stipulated,' and they are so found. Petitioner resided in the State of Kansas at the time this petition was filed. On September 7, 1995, the District Court of Finney County, Kansas held a hearing to determine the visitation rights and child support obligations of petitioner with respect to minor child TW. Mr. 25 Warren was confirmed via genetic testing to be the 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 5 1 2 natural father of TW showing a 99.8% probability of paternity. The court ordered that petitioner and the 3 mother of the child, Ms. Smith, would share joint 4 custody with the primary residence of TW being with 5 Ms. Smith. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 With respect to support obligations, the court ordered petitioner to pay child support in the amount of $169 per month commencing September 1, 1995, and ending when TW "completed his education and was emancipated from the home." The district court increased the initial support obligation of $144 reflected as a "deviation from the rebuttable presumption amount" on the child support worksheet by $25 for "income tax considerations". That document was signed by the judge. The court further ordered that petitioner maintain maximum health care coverage for TW and be responsible for 52% of all medical, dental, and orthodontic expenses incurred on behalf of the child not paid by health insurance. The court also stated that if petitioner was current on his child support and medical insurance coverage, that he would be entitled to claim TW on his income tax returns. For tax year 2009 petitioner was current on his child support payments and medical insurance coverage 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 for TW. Accordingly, petitioner filed his Federal income tax return for tax year 2010 claiming a dependency exemption deduction and child tax credit for his support of TW. Petitioner did not, however, attach a Form 8332, Release/Revocation of Release of 6 Claim to Exemption for Child by Custodial Parent. As 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 supporting evidence, petitioner attached the journal entry and worksheet from the District Court of Finney County, Kansas, detailing his support obligations to TW and his entitlement to claim TW as a dependent. These forms were not signed by petitioner or Ms. Smith, nor did they reflect the Social Security number of either party. On October 12, 2011, respondent issued to petitioner a notice of deficiency for tax year 2009. Respondent determined that petitioner failed to establish that he was entitled to the dependency exemption deduction and child tax credit for TW for tax year 2009. Respondent noted that the documentation provided was insufficient to show that petitioner had a right to claim TW as a dependent, or that the custodial parent had released that right to him. On January 6, 2012, petitioner filed a petition in this Court for redetermination of this alleged deficiency for tax year 2009. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 VII. We turn now to the substantive law. Generally, taxpayers may claim dependency exemption deductions for their dependents. Sec. 151(c). The term "dependent" includes a "qualifying child". Sec. 152(a). A qualifying child is defined as an individual who: (1) bears a certain relationship to the taxpayer, such as the taxpayer's child; (2) has the same principal place of abode as the taxpayer for more than one-half of the taxable year; (3) meets certain age requirements; and (4) has not provided over one-half of the individual's own support for the taxable year. Section 152(e), however, provides special rules where the parents of a minor child who: (1) are divorced or legally separated under a decree of divorce or separate maintenance; (2) separated under a written separation agreement; or (3) live apart at 19 all times during the last 6 months of the calendar 20 21 22 23 24 25 year. In such cases, where the child is in the custody of one or both of the parents for more than one-half of the calendar year, section 152(e)(1) allows the dependency exemption to the noncustodial parent only if the following conditions are met: (1) the custodial parent signs a written declaration that 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 such custodial parent will not claim such a child as a dependent for the taxable year; and (2) the noncustodial parent attaches the written declaration to the noncustodial parent's return for the taxable year. Sec. 152(e)(2). The written declaration may be made on a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, provided by the Internal Revenue Service, or a document that conforms to its substance. Miller v. Commissioner, 114 T.C. 184, 190-91 (2000); see also Neal v. Commissioner, T.C. Memo. 1999-97. The substance of Form 8332 includes: (1) the children's names and the years for which exemption claims are released; (2) the custodial parent's signature and date thereof; (3) the custodial parent's Social Security number; and (4) the noncustodial parent's name and Social 18 Security number. Miller v. Commissioner, 114 T.C. at 19 20 21 22 23 24 190. In Miller v. Commissioner, 114 T.C. at 191-195, the Court stated that in order for the noncustodial parent to claim the dependency exemption, section 152(e)(2) clearly requires the custodial parent's release of the dependency exemption by signing a 25 written declaration to that effect. The Court held 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 that simply attaching a State court order that was not signed by the custodial parent to the noncustodial parent's return does not satisfy the express requirements of section 152(e)(2). Id. at 196. The mere fact that the State court granted the taxpayer the right to claim the dependency exemption is immaterial because a State court cannot determine issues of Federal tax law. Id. Petitioner and Ms. Smith are not married and do not live together. TW resided with Ms. Smith during tax year 2009 and petitioner does not dispute that she was the custodial parent. Accordingly, in order for petitioner to be entitled to claim TW as a dependent for tax year 2009, he would have had to furnish with his return a written declaration by Ms. Smith that she would not claim TW as a dependent for tax year 2009. Such declaration would have to have been on a Form 8332 or a document that conforms to its substance. Petitioner did not attach a Form 8332 to his return for tax year 2009. Instead petitioner attached the journal entry and worksheet from the 23 District Court of Finney County, Kansas as 24 25 documentation to show he was entitled to claim TW as a dependent. These documents make it clear that, at 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 least at the time of the court's order, petitioner was entitled to claim TW as his dependent so long as he was current with his child support and medical insurance coverage. There is even an indication that petitioner's support payments were increased from $144 to $169 for income tax considerations. However, these documents do not conform to the substance of Form 8332 for a number of reasons. First, the journal entry and worksheet were from 1995, and did not specifically state that petitioner was entitled to claim TW for the year at issue. Second, the document did not identify the Social Security numbers of petitioner or Ms. Smith. Most importantly, the document was not signed by Ms. Smith, the custodial parent. Accordingly, the documentation provided by 16 petitioner was insufficient to satisfy the 17 18 19 20 21 22 23 24 25 requirements of section 152(e)(1). Petitioner is not entitled to claim TW as his dependent for tax year 2009. Section 24(a) provides a credit against income tax for each qualifying child of a taxpayer (as defined in section 152(c)) who is under the age of 17. A qualifying child is one for whom a tax er may claim a deduction under section 151. Sec. 24(c)(1). Because petitioner is not entitled to the 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company dependency exemption deduction for the child under section 151, petitioner cannot claim a child tax credit for the child for tax year 2009. Respondent's determination is sustained. 11 VIII. In order to give effect to our disposition of the disputed issues, decision will be entered for respondent. IX. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 2:20 p.m., the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.Capita1ReportingCompany.com