TAX COURT OPINION

Case: Kent McCoy
Docket Number: 12660-12S
Judge: Paris
Opinion Type: bench
Filed: 06/19/2013
Pages: 11

UNITED STATES TAX COURT WASHINGTON, DC 20217 SEC KENT MCCOY, Petitioner . . v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 12660-12S. ) ) ) ) ) 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 Omaha, Nebraska, on May 22, 2013, 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 19, 2013 SERVED Jun 21 2013 Capital Reporting Company Bench Opinion by Judge Elizabeth Crewson Paris 3 May 22, 2013 · Kent McCoy v. Commissioner Docket No. 12660-12S THE COURT: This is a bench opinion by Judge Elizabeth Crewson Paris, Kent McCoy versus Commissioner, Docket No. 12660-12S, May the 22nd, 2013. 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. Rule references in this opinion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 will be to the Tax Court Rules of Practice and 15 16 17 18 19 20 21 22 23 24 25 Procedure, and section references will be to the Internal Revenue Code, as amended and in effect for the taxable year in issue. II. This case is before the Court on the basis of the Court's deficiency jurisdiction under section 6213(a). This proceeding was heard as a Small Tax Case pursuant to the provisions of section 7463 and Rules 170 through 175. III. The decision to be entered in this case is 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 not reviewable by any other court and shall not be relied upon as precedent in any other case. This bench opinion is issued pursuant to section 7459(b) and Rule 152. IV. Mr. Kent McCoy appeared personally in this proceeding and Randall L. Eager, Jr., appeared on behalf of respondent. In this opinion, references to "petitioner"·are references to Mr. McCoy. V. The parties' stipulation of facts and the attached exhibits are incorporated herein by this reference. Petitioner resided in Nebraska when petition was filed. VI. Respondent determined a Federal·income tax deficiency of $1,912 in petitioner's 2009 tax year. 18 Petitioner filed a petition with this Court for a 19 20 21 22 23 24 25 redetermination of the deficiency. The tax deficiency is.attributable solely to the denial of petitioner's dependency exemption deduction for one of his children and a child tax credit for that child. Therefore, the issue for decision is whether petitioner is entitled to a dependency exemption deduction for one of his children under section 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 151(c), and a child tax credit for that child under 5 section 24 (a). VII. Petitioner was married to Tracy McCoy, and they have two minor children. They were divorced in 2003. The family court' s "Decree of Dissolution of 1 2 3 4 5 6 7 Marriage" provided that Ms . McCoy was awarded primary 8 9 10 11 12 13 14 15 16 17 18 19 physical custody of their two children, and petitioner would be liable for child support payments. The divorce decree also provided that as long as there are two minor children eligible to be claimed as dependency exemptions for tax purposes, petitioner shall be allowed to claim one of the minor children as a dependency exemption for tax purposes provided that he is current on his child support obligation on the last date of the tax year. This provision makes petitioner's entitlement to the dependency exemption contingent on his being current 20 with his child support obligations. 21 22 23 24 25 The divorce decree does not require Ms. McCoy to sign a release, such as a Form 8332, "Release of Claim to Exemption for Child of Divorced or Separated Parents". In addition the divorce decree did not address any other duties of Ms. McCoy 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 that would facilitate petitioner's dependency exemption claim on his income tax return. In 2009 petitioner's children resided with Ms. McCoy more than one-half of the year. At the beginning of December 2009 petitioner was current 6 with his child support payments . On December the 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 10th, 2009, however, the family court filed an "Order of Modification" that modified petitioner' s divorce decree to increase his monthly child support payments beginning retroactively on June 1st, 2009. As a result, petitioner was in arrears in his child support payments on December 31st, 2009. By the end of January 2010, petitioner paid the retroactively increased child support payments and was current with his child support obligations to Ms. McCoy. VIII. Submitted with the stipulation of facts is the Nebraska Child Support Payment History Report of petitioner's child support payments for December 2002 through December 2009. On December 31st, 2009, petitioner was in arrears in his child support payments by $1,203.47. Petitioner also owed interest of $26.11 for a total balance of $1,229.58. Thus, as of December 31st, 2009, petitioner was not current 25 with his child support payments. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company IX. 7 Petitioner timely filed his Federal income tax return for tax year 2009. On his return petitioner claimed a dependency exemption deduction for one of his children and a child tax credit for that child. Petitioner did not attach a Form 8332 or an equivalent document to his 2009 income tax return. X. On February 13th, 2012, respondent sent petitioner a notice of deficiency for tax year 2009. Respondent denied petitioner's dependency exemption deduction and the corresponding child tax credit, and determined that petitioner owed additional tax of $1,912. Petitioner timely filed a petition with the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Court for a redetermination of his tax liability 16 17 18 19 (sic, s/b deficiency). XI. On May 20, 2013, the parties appeared before the Court for the Regular Trial Session of the 20 Court in Omaha, Nebraska. At trial, petitioner 21 22 23 24 25 acknowledged that he was not the custodial parent of his two minor children during 2009, and as of December the 31st, 2009, he was not current with his child support payments. Petitioner did not provide the Court with a signed 8332 or similar release from 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 17 18 19 20 21 22 23 24 25 Ms. McCoy, the custodial parent, for the 2009 tax year. In addition, Ms. McCoy refused to execute a Form 8332 for the 2009 tax year based on her understanding of the divorce decree. Nonetheless, petitioner claimed that he was entitled to a dependency exemption deduction and child tax credit for one of his children for the 2009 tax year. XII. Under Rule 142(a), petitioner has the burden of proof to show that he is entitled to the dependency exemption deduction and the child tax credit. XIII. Section 151(c) provides that an individual is allowed a deduction for an exemption for "each individual who is a dependent (as defined in section 152) of the taxpayer for the taxable year." Section 152 (a) defines "dependent" to include "a qualifying child". Generally, a "qualifying child" must: (1) bear a specified relationship to the taxpayer (e.g., be a child of the taxpayer), (2) have the same principal place of abode as the taxpayer for more than one-half of such taxable year, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company (3) meet certain age requirements, (4) not have provided over one-half of such 9 individual's support for the taxable year at issue, and (5) not have filed a joint return for that year. Section 152(c) (1). Under these provisions, petitioner cannot claim his children as dependents for 2009 because, as he admits, they did not share the same place of abode 1 2 3 4 5 6 7 8 9 10 with him for more than one-half of the year. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 XIV. However, special rules apply in the case of divorced parents. Section 152(e) provides that a child may be treated as a qualifying child of the noncustodial parent rather than the custodial parent if certain criteria are met. Under section 152(e) (1) and (2), a child could be the qualifying child of the custodial (sic, s/b noncustodial) parent if: (1) The "child receives over one-half of the child's support under the calendar year from the child's parents * * * who are divorced * * * under a decree of divorce", section 152 (e) (1) (A), (2) such child was "in the custody of 1 or both of the child's parents for more than one-half of the calendar year", section 152 (e) (1) (B), 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 (3) "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", section 152 (e) (2) (A), and (4) "the noncustodial parent attaches such 2 3 4 5 6 7 8 written declaration to the noncustodial parent's 9 return" for the appropriate taxable year, section 10 11 12 13 14 15 16 17 18 152 (e) (2) (B). The Internal Revenue Service's prescribed means for the custodial parent to make a written declaration is Form 8332, on which the custodial parent agrees not to claim a child as a dependent. The custodial parent may make this declaration on a document equivalent to Form 8332, but the necessary element for satisfying the statutory requirements of a written declaration is the custodial parent's 19 written statement that ·he or she will not claim the 20 21 22 23 24 25 child as a dependent for a taxable year. Under section 152(e) (4), petitioner is the child's noncustodial parent and Ms. McCoy is the child's custodial parent because the State court orders gave Ms. McCoy "primary physical custody" of their children. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 Ms. McCoy never signed a written declaration that she would not claim her children as dependents for 2009, and petitioner did not attach a 4 written declaration signed by Ms. McCoy to his 2009 11 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23- 24 25 tax return. Therefore, for the 2009 tax year, petitioner did not satisfy the requirements of section 152(e), and he may not treat any of his children as a qualifying child for the purposes of the dependency exemption deduction. XV. In reaching this decision, the Court notes that-the Internal Revenue Code, and not State court orders, determines a taxpayer's eligibility to claim a deduction for Federal income. tax purposes. See Shenk v. Commissioner, 140 T.C. , (slip op. at 4) (May 6th, 2013). Therefore, even if petitioner satisfied his child support obligations under his divorce decree, he cannot claim a dependency exemption deduction without meeting the Code's requirements for a written declaration signed by Ms. McCoy . XVI. Section 24 (a) and (c) (1) provide that a taxpayer is entitled to a child tax credit for "each qualifying child", as defined in section 152 (c), who 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 2 3 4 5 6 7 8 9 10 11 has not reached the age of 17 and for whom the taxpayer is allowed a dependency exemption deduction under section 151. The Court has determined that neither one of petitioner's children is a "qualifying child" under section 152(c) for the 2009 tax year and petitioner is not entitled to a dependency exemption deduction for that year. Therefore, petitioner is also not entitled to a child tax credit for 2009. XVII. In reaching our holdings, the Court has considered all arguments made, and, to the extent not 12 mentioned, the Court concludes that they are moot, irrelevant, or without merit. XVIII. To reflect the foregoing, decision will be entered for the respondent. XIX. This concludes the Court's oral findings of facts and opinion. (Whereupon, at 4:34 p.m., the above- entitled matter was concluded.) 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com