TAX COURT OPINION

Case: Chad Michael McDonald
Docket Number: 26504-07
Judge: Colvin
Opinion Type: bench
Filed: 04/10/2009
Pages: 7

UNITED STATES TAX, COURT WASHINGTON , D .C . 2021 7 CHAD MICHAEL MCDONALD, Petitioner , v . COMMISSIONER OF INTERNAL REVENUE, Respondent . Docket No . 26504-0 7 O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a cop of the pages of the transcript of the trial of the above case before Judge Diane L . Kroupa at Salt Lake City, Utah on March 18, 2009, containing her oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, a decision will be entered for respondent as to the deficiency but for petitioner as to the accuracy-related penalty under section 6662 . (Signed ) Diane L. Kroupa Judg e Dated : Washington, D .C . April 10, 2009 3 Bench Opinion by Judge Diane L . roupa March 18, 200 9 2 Chad Michael McDonald v . Commiss loner Docket No . 26504-0 7 3 THE COURT : The Court has decided to render ora l 4 findings of fact and opinion in this case, and the following 5 represents the Court's oral findings of fact and opinion . 6 These oral findings of fact and opinion shall not be relie d 7 upon as precedent in any other case . 8 This bench opinion is made pursuant to th e 9 authority granted in Section 7459(b) and Rule 152 . All 10 section references are to the Internal Revenue Code a s 11 amended and in effect for 2005, and all rule references are 12 to the Tax Court Rules of Practice and Procedure . 13 Chad Michael McDonald appeared on his own behalf . 14 Mark Howard appeared on behalf of Respondent . 15 Respondent determined in-a statutory notice o f 16 deficiency dated August 24th, 2 07 that there was a $2,25 6 17 deficiency in income tax from Petitioner, and a $451 .2 0 18 accuracy-related penalty for t h taxable year 2005 . 19 There are three issues for decision . First, i s 20 Petitioner entitled to claim dependency exemptions for hi s 21 two oldest children, who lived Vvith Petitioner's ex-wife fo r 22 the entire year 2005 if the ex- if e, as custodial parent , 23 did not provide Petitioner a wr tten waiver of her right a s 24 the custodial parent to claim the child as a dependent? W e 25 hold that he is not . Heritage Reporting Corporation (202) 62 ? -4888 4 1 Second, is Petitioner entitled to a child ta x 2 credit or an additional child t x credit under Section 24 if 3 Petitioner is not allowed a dependency exemption for either 4 of his children? We hold that he is not . S Finally, is Petitioner liable for the accuracy- 6 related penalty under Section 6662? We hold that Petitioner 7 had reasonable cause, and is no~ liable for the accuracy- 8 related penalty . 9 FINDINGS OF FACT 10 Some of the facts have been stipulated, and they 11 are so found . 12 Petitioner resided in' Utah at the time he filed the 13 petition with the Court . 14 We begin with the burden of proof . The burden of 15 proof is generally on the taxpayer . Rule 142(a)(1) . 16 . Although Section 7491 applies tb this case because it 17 involves issues relating to 200, Section 7491 does no t 18 shift the burden of proof to Respondent because Petitioner 19 failed to introduce credible evidence . Accordingly , 20 Petitioner has the burden of prof . 21 We now address whether a non-custodial parent is 22 entitled to a dependency exemption . The parties do no t 23 dispute that the two children ae the children of Petitioner 24 and Petitioner's ex-wife, who are no longer married . 25 Petitioner's ex-wife was the cu todial parent of all three Heritage Reporting Corporatio n (202) 6218-4888 1 of their children in 200 5 Petitioner filed afederal income tax return for . 2005 on which he claimed his so ~ dependents . Petitioner's .ex-w i with a written waiver, of her-right as custodial parent t o claim the children as dependent nor did Petitioner mai l Respondent a Form .8332 or similar statement from, Petitioner's ex-wife allowing P titioner as the non- custodial parent to claim the c ildren as dependents . Petitioner has paid mo e than half'of his 11 children's expenses and'claims that he should be entitle d 12 to claim both as dependents, .no withstanding the lack of 13 consent from the custodial parelt . Petitioner introduce d the divorce decree in which it uthorized Petitioner t o claim the two older children un it the son turns 18 . The law is clear . A t xpayer may generally . claim a 15 1 6 17 dependency exemption for a depe dent over half of whose . 18 support the taxpayer provides . Sections 151(a), (c)(1) , 20 parent to claim the-dependency exemption fora child if the 21 custodial parent signs a writte~ declaration releasing hi s 22 or her claim to the deduction, and the non-custodial parent 23 attaches the declaration to his or her tax return . Section 24 .152(e)(1) . Here, there is no e idence in the record that 25. Petitioner's ex-wife completed the signed waiver, nor is Heritage,Reporti g Corporatio n (202) 62 18 -4888 0 1 there any evidence that Petitioner attached the waiver to 2 his tax return for 2005 . In fact, the evidence shows that 3 no such waiver was ever completed . 4 Although we are sympathetic to Petitioner' s 5 position, we are . bound by the language of the statute as it 6 is written . Michaels v . Commissioner , 87 T .C . 1412, 141 7 7 (1986) . The statute prescribes the precise circumstance i n 8 which a non-custodial parent is entitled to a dependenc y 9 exemption . See Neal v . Commissioner, T .C . Memo 1999-97 . 10 Petitioner has not shown that h qualifies . Moreover, if we 11 ruled in Petitioner's favor, we would find ourselves in the 12 middle of a custody fight simil r to those which Congres s 13 intended to remove from the federal courts when it amended 14 Section 152(e) in 1984 . See Miller v . Commissioner , 114 15 T .C . 184, 196 (2000) . Accordin ly, Petitioner is no t 16 entitled to claim his two children as dependents for 2005 . 17 We next address the ch ld tax credit . Section 18 '24(a) authorizes a child tax credit with respect to eac h 19 "qualifying child" of the taxpayer . The term "qualifying 20 child" is defined in Section 24 (c) . As relevant here , 21 "qualifying child" means an individual with respect to whom 22 the taxpayer is allowed to clam as a dependent unde r 23 Section 152 . Sec . 24(c) (1) (A) . 24 We have already held tiat Petitioner is no t 25 entitled to claim dependency exemptions for his children, Heritage Reporting Corporatio n (202) 6218-4888 e 7 1 and therefore, neither of his chl'ldren is a "qualifying 2 child" within the meaning of Section 24(c) . It follows, 3 therefore, that Petitioner is not entitled to a child tax 4 credit under Section 24 . Accor ingly, he is also no t 5 entitled to the additional child tax credit . 6 Finally, we address the Section 6662 penalty . 7 Section 6662 imposes an accuracy related penalty for 2 0 8 percent of any amount of underp yment of tax required to be 9 shown on the return attributable to negligence or disregard 10 of rules and regulations . Negligence includes any failure 11 to make a reasonable attempt to comply with the provisions 12 of the internal revenue laws . Sec . 1 .6662-3(b), Income Ta x 13 Regs . 14 We have found that Pet tioner paid for,more tha n 15 half of his children' s expenses and that Petitioner wa s 16 entitled to claim two children as dependents pursuant to the 17 divorce decree . we therefore find that Petitioner mad e 1 18 reasonable attempts to comply with the internal revenu e 19 laws, and is therefore not .liable for the accuracy-related 20 penalty . 21 To reflect the foregoing, decision will be entered 22 for Respondent regarding the deficiency, but for Petitioner 23 for the penalty . 24 This concludes the Court's oral findings of fact 25 and opinion in this case . Heritage Reporti g Corporation (202) 62, -4888 I 1 Thank you . 2 (Whereupon, at 8 :46 a . m the bench opinion in th e 3 above-entitled case was concluded .) 8 4 5 6 // 7 8 // 9 10 11 // 12 // 1 3 14 15 // . 16 // 17 // 1 8 19 20 // 21 // 22 // 23 // 24 // 25 // Heritage Reporting Corporation (202) 628-4888