TAX COURT OPINION

Case: Leon A. Garner
Docket Number: 28940-14S
Judge: Buch
Opinion Type: bench
Filed: 12/01/2015
Pages: 11

RMM UNITED STATES TAX COURT WASHINGTON, DC 20217 LEON A. GARNER, Petitioner, v. ) ) ) ) Docket No. 28940-14S. 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 with this order to petitioner and respondent a copy of the pages of the transcript of the trial in this case before Judge Ronald L. Buch at St. Louis, Missouri, containing his 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, decision will be entered for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. December 1, 2015 SERVED Dec 02 2015 Capital Reporting Company 3 1 Bench Opinion by Judge Ronald L. Buch 2 October 22, 2015 3 4 5 Leon A. Garner v. Commissioner Docket No. 28940-14S THE COURT: The following represents the 6 Court's Oral Findings of Fact and Opinion. The Oral 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Findings of Fact and Opinion may not be relied upon as precedent in any other case. This opinion is in conformity with Internal Revenue Code section 7459(b) and Rule 152(a) of the Tax Court Rules of Practice and Procedure. Any section references refer to the Internal Revenue Code or the Treasury regulations in effect during the year at issue, and Rule references are to the Tax Court Rules of Practice and Procedure. This case was heard pursuant to section 7463. Under section 7463(b), the decision to be entered in this case is not reviewable by any other court, and this opinion may not be treated as precedent for any other case. The issue in this case is whether Mr. 21 Garner can claim a dependency exemption deduction and 22 a child tax credit for his son for 2011, a time when 23 Mr. Garner was a noncustodial parent. In order for a 24 25 noncustodial parent to be entitled to the deduction and credit, section 152¢ requires that the custodial 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company parent relinquish their claim. Mr. Garner is not entitled to the dependency exemption or the child tax credit because there was no evidence of a release of claim by the custodial parent. 4 Background Leon A. Garner has a minor son with his ex- 1 2 3 4 5 6 7 8 9 wife, Yamara Cruz. Based on the parenting plan 10 11 12 13 14 attached to their divorce decree entered on April 15, 2005, Mr. Garner was entitled to a partial custody of his son. Ms. Cruz left Missouri with her son in late 2010, and Mr. Garner has not had actual custody of his son since then. Mr. Garner's son did not live 15 with him at all during 2011, the year at issue. Mr. 16 Garner and his ex-wife disagree on the question of 17 18 19 20 21 22 23 24 25 whether Mr. Garner provided any financial support for his son during 2011, but the only support Mr. Garner identified was including his son on his health insurance; not enough to rise to providing most of the support. As part of their divorce, a proposed parenting plan was created. Much of the trial time was devoted to the meaning of the proposed parenting plan and its interrelationship (if any) with the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 family court judgment that was signed "So Ordered 4/15/2005." The reason for this attention is that the proposed parenting plan (at page 19) arguably addresses the allocation of the dependency exemption between the parents. On that page, the handwritten entries arguably indicate that the father will receive the dependency exemption in odd years and that the mother will receive it in even years. but even that is unclear, because the word "Mother" appears to be stricken out with "Father" written in its place. Also, the proposed parenting plan has boxes in which to indicate whether child support will be within the Missouri Child Support guidelines. The "yes" box is checked and that is scribbled out, and the "no" box is checked with the notation "because sharing tax credit." Mr. Garner takes the position that the handwritten entries on the proposed parenting plan, including this notation, were made by Ms. Cruz. Although the proposed parenting plan is unsigned, Mr. 21 Garner seems to argue that, because the proposed 22 23 24 25 parenting plan was written by Cruz, we should treat a having been signed by her. However, Ms. Cruz stated that the handwriting was not hers and that she writes in all capital letters. After Ms. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 Cruz was released as a witness, the Court noticed and called to Mr. Garner's attention the handwriting (in 3 all caps) beneath Ms. Cruz's signature on page three 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 of the family court order. Mr. Garner recognized that handwriting as that of Ms. Cruz. Notably, that handwriting bears no resemblance to the handwriting on the proposed parenting plan. It is also worth noting that the handwriting on the proposed parenting plan bears a striking resemblance to that contained on the handwritten petition Mr. Garner filed in this case. We are persuaded that the proposed parenting plan was not written by Ms. Cruz. It appears likely that it was written by Mr. Garner, but we need not decide that issue. Mr. Garner alternatively argues that the proposed parenting plan is incorporated by reference into the family court judgment of April 15, jk&dI5 The family court judgment incorporates by reference a parenting plan that is attached to the judgment as 20 Exhibit 1. Neither the judgment nor its accompanying 21 Exhibit 1 make any reference to the proposed 22 23 24 25 parenting plan. Mr. Garner claimed his son as a dependent on his 2011 tax return. On October 31, 2014, the Commissioner issued a Notice of Deficiency for 2011. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 That notice determined that Mr. Garner was not entitled to either the dependency exemption for his son or the child tax credit that would also accompany that dependency exemption. Mr. Garner timely petitioned to challenge the Commissioner' s determination while residing in Missouri. Discussion As a general matter, the Commissioner' s determinations in the Notice of Deficiency are presumed correct, and the taxpayer bears the burden of proving an error. (Rule 142(a); Welch v. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Helvering, 290 U.S. 111, 115 (1993).) In limited 15 16 17 18 19 20 21 22 23 24 25 situations, the burden can shift to respondent under section 7491(a), but the record does not establish that the criteria under section 7491 have been established, therefore, the burden of proof remains on Mr. Garner. I. Dependency Exemptions A. Qualifying Child and Qualifying Relative Section 151(c) allows a taxpayer an 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 exemption deduction for a child who qualifies as a dependent under section 152. Section 152(a) provides that a dependent is either a qualifying child or a qualifying relative. Generally, among other requirements, a qualifying child must share a residence with the person claiming the dependency exemption for more than six months of the taxable year. Section 152(c)(1)(B). If a child is not a qualifying child, then the person claiming the dependency exemption on the basis that the child is a qualifying relative instead must show that he provided more than one-half of the support for that child for the taxable year. Sec. 152(d)(1)(C). Mr. Garner's son is not his qualifying child for that year because Mr. Garner did not have custody of his son at all during 2011. Likewise, Mr. 17 Garner's son is not his qualifying relative because 18 Mr. Garner did not provide more than one half of the 19 20 21 22 23 24 25 support for his son during 2011 while his son was living with his mother and grandmother. B. Special Rule for Divorced Parents Section 152(e) has a special rule to determine which parent is entitled to the dependency 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 exemption deduction in the case of divorced parents. Section 152 provides that notwithstanding the general requirements for qualifying children and qualifying relatives mentioned above, the custodial parent is entitled to the dependency exemption unless the custodial parent releases claim to the exemption for the year. Custodial parents are defined as the parent who has custody of the child for the greater portion of the year. Sec. 152(e)(4) (A). If the custodial parent releases the exemption for the child, then the child will be treated as the qualifying child or qualifying relative of the noncustodial parent. Sec. 152(e)(1)(B); sec. 1.152- 4(a), Income Tax Regs. Among other requirements, the custodial parent must sign a written declaration that the custodial parent will not claim such child as a dependent for the taxable year and that declaration 19 must be attached to the noncustodial parent's return 20 21 22 23 in order for the noncustodial parent to claim the exemption. Sec. 152(e)(2). This declaration must be made either on a completed Form 8332 or an equivalent document that conforms to the substance of that form. 24 Miller v. Commissioner, 114 T.C. 184, 189 (2000); 25 sec. 1.152-4(e)(1)(ii), Income Tax Regs. Form 8332 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 is titled "Release /Revocation of Release of Claim to Exemption for Child by Custodial Parent" and requires the following: the noncustodial parent's name and social security number; the name of the child; the custodial parent's social security number and signature; the years for which the claim is released; and the date that that form was signed. After July 2, 2008, a court order or decree or a separation agreement may not serve as a written declaration. Sec. 1.152-4(e)(1)(ii), Income Tax Regs. However, written declarations executed in a taxable year beginning on or before July 2, 2008 are governed by a transition rule. Sec. 1.152-4(e)(5), Income Tax Regs. Under this rule, "if a written declaration was executed in a taxable year beginning on or before July 2, 2008, we look to the requirements for the form on a written declaration that were in effect at the time the written declaration was executed." Swint v. Commissioner, 142 T.C. 131, 135 (2014); sec. 1.152-4(e)(5), 1.152- 4(g), Example 19, Income Tax Regs. During 2004 and 2005, the regulation prohibiting court orders, decrees, or separation agreements from qualifying as a written declaration was not in effect. Sec. 1.152- 4(e)(5). However, the rules still required that the 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.CapitalReportingCompany.com Capital Reporting Company 11 1 2 3 4 5 6 7 8 9 10 11 12 document waiving the dependency exemption must still be signed by the custodial parent and cannot be conditional. See sec. 152(e) (2) (A); sec. 1.152- 4(e)(1) (ii), Income Tax Regs.; Swint v. Commissioner, 142 T.C. at 136-137; Armstrong v. Commissioner, 139 T.C. 468 at 474 (2012); Miller v. Commissioner, 114 T.C. at 193. Mr. Garner claims that various documents from the time of the divorce satisfy this rule. The only document that comes close to addressing who receives a dependency is the proposed parenting plan, which was not signed by and not written by Ms. Cruz. .13 And there is no indication that the proposed 14 15 16 17 18 19 20 21 22 23 parenting plan is incorporated by reference into the family court judgment of April 15, 2005. Mr. Garner has not satisfied the requirements for obtaining a release by the custodial parent. Mr. Garner did not attach a Form 8332 to his 2011 return. The proposed parenting plan was not signed by the custodial parent or made part of the family court judgment. The other documents he cites are silent on the issue. Because there is no evidence of a release by the custodial parent, Mr. 24 Garner is not entitled to the dependency exemption 25 for 2011. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 II. Child Tax Credit Taxpayers are allowed a credit against their income tax for any qualifying child for whom the taxpayer was allowed a deduction under section 151, the dependency exemption deduction. (Sec. 24(a).) A qualifying child is defined by the requirements in section 152(c) as modified here by section 152(e). See sec. 24(c)(1). Because the child is not a qualifying child of Mr. Garner for 2011, he is not entitled to a child tax credit for 2011. Conclusion We find that Mr. Garner is not entitled to the dependency exemption deduction and child tax credit for 2011, and we sustain the Commissioner' s determination in the Notice of Deficiency. An appropriate order will be forthcoming. (Whereupon, at 9:10 a.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.CapitalReportingCompany.com