TAX COURT OPINION

Case: Jason A. Mathews
Docket Number: 16217-15
Judge: Kerrigan
Opinion Type: bench
Filed: 10/18/2016
Pages: 9

CZ UNITED STATES TAX COURT WASHINGTON, DC 20217 JASON A. MATHEWS, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. ) ) ) ) 16217-15. ORD E R 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 Kathleen Kerrigan at Chicago, Illinois on September 14, 2016, containing her oral findings of fact and opinion rendered at the conclusion of the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Kathleen Kerrigan Judge Dated: Washington, D.C. October 18, 2016 SERVEDOct192016 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Bench Opinion by Judge Kathleen Kerrigan September 15, 2016 Jason A. Mathews v. Commissioner Docket No. 16217-15 THE COURT: The Court has decided to render in this case the following as its oral Findings of Fact and Opinion which shall not be relied upon as precedent in any other case. This bench opinion is made pursuant to the authority granted in section 7459(b) and Rule 152 of the Tax Court Rules of Practice and Procedure. By Notice of Deficiency dated March 20th 2015, the Internal Revenue Service determined a deficiency in the Federal income tax of Petitioner for tax year 2012. After Petitioner's concessions, the issues for our consideration are whether 17 Petitioner is entitled to a dependency exemption for 18 19 20 21 22 23 24 25 his son T.M. for tax year 2012, a child tax credit for 2012, and head of household filing status for 2012. Trial of this case was conducted on September -14, 2016, in Chicago, Illinois. Petitioner represented himself and Elizabeth S. McBreary represented Respondent. The parties' Stipulation of Facts was admitted into evidence along with the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 attached exhibits. We find the following facts: FINDINGS OF FACT Petitioner resided in Illinois when the petition was filed timely. Petitioner and his former 5 wife were married on November 2nd 1996 in Illinois. 6 7 8 9 10 11 12 13 14 They had two children: M.M. born on August 3rd ggg and T.M. born on June 19th gg7 Petitioner and his former wife entered into a marriage settlement agreement on September 2nd, 2003, in the Circuit court of Cook County, Illinois. The marriage settlement awarded sole custody of the children to Petitioner's former wife. The agreement provides that each party shall claim one child as a deduction for federal and state income tax purposes. 15 Petitioner's former wife was entitled to claim T.M. 16 on her income tax returns. The agreement states that 17 Petitioner's former wife "shall execute an IRS Form 18 19 20 21 22 23 8332 to enable Petitioner to claim T.M. on his income taxes." Petitioner's former wife did not execute a Form 8332, Revocation/Release of Claim to Exemption for child by Custodial Parent. The Circuit Court of Cook County, Illinois entered an order providing the custody schedule. 24 Petitioner had visitation with his children every 25 Tuesday and Thursday starting in the afternoon and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 ending the following morning. Petitioner also had custody of his children every other weekend from Thursday until Monday. Petitioner credibly testified that he had custody of his children for half the year during 2012. He further testified that his son lived with him for half of 2012 and that he paid for his son's living expenses. During 2012 Petitioner owned his own house and paid his mortgage, utility bills, food 10 bills and other expenses related to the ca e of his 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 son, including activities such as karate lessons. I. Burden of Proof OPINION The Commissioner's determination is presumed correct, and generally the taxpayer bears the burden to provide his entitlement to the exemptions and credits he claims. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Petitioner does not contend that the burden of proof should be shifted to Respondent under section 7491(a), and the record does not suggest any basis for a shift. II. Dependency Exemption Deduction Section 151 provides that an individual is entitled to a deduction for his or her dependents. Section 151(c) provides an exemption for each 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 dependent of the taxpayer as defined in section 152. Section 152(a) defines the term "dependent" to mean either a "qualifying child" or a "qualifying relative". In addition, section 152(e) provides a "Special Rule for Divorced Parents, Etc." This special rule for divorced parents applies to 8 Petitioner because he is not the custodial parent. 9 Where the parents of dependent children are divorced 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or legally separated, section 152(e)(1) allows the dependency exemption to the parent having custody of the children for the greater portion of the calendar year (custodial parent). Custody exists only where the parent has "the right under state law to physical custody of the child". Sec. 1.152-4(c), Income Tax Regs. Petitioner's former wife was the custodial parent of both children in 2012 pursuant to an order for custody/visitation issues by the State of Illinois. As an exception to the general rule, a noncustodial parent may claim the exemption where the custodial parent executes a valid written declaration releasing his or her claim to the exemption and the noncustodial parent attached that declaration to his or her Federal income tax return for the taxable 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 year. Sec. 152(e)(2); sec. 1.152-4(e), Income Tax Regs. The declaration required by section 152(e)(2) 3 must be made on either Form 8332 or on a statement 4 5 6 conforming to the substance of that form. See Miller v. Commissioner, 114 T.C. 184, 190-191 (2000), aff'd sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th 7 Cir. 2002). 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Section 1.152-4(e)(1)(i), Income Tax Regs., provides that the written declaration must be an "unconditional release" of the custodial parent's claim to the child as a dependent. "A declaration is not unconditional if the custodial parent's release of the right to claim the child as a dependent requires the satisfaction of any condition." Id. Section 1.152-4(e)(2), Income Tax Regs., provides that the noncustodial parent must attach a copy of the written declaration to the parent's tax return for each taxable year for which the child is claimed as a dependent. A court order/decree may qualify as a written declaration if it was executed in the taxable year beginning on or before July 2nd, 2008. See Swint v. Commissioner, 142 T.C. 131, 136-137 (2014); sec. 1.152-4(e)(5), Income Tax Regs. Petitioner did not attach to his 2012 tax return a Form 8332. Instead, he argues that the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 court order qualifies as a written declaration. The court order states that petitioner's wife "shall execute an IRS Form 8332 to enable Petitioner to claim T.M. on his income taxes." The agreement is not an unconditional release and accordingly does not qualify as a written declaration. Accordingly, 7 Petitioner is not entitled to claim a dependency 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 exemption for T.M. III. Child Tax Credit Section 24(a) provides a credit against income tax for each qualifying child of a taxpayer for whom the taxpayer is allowed a deduction under 151. Because Petitioner may not claim a section 151 exemption for T.M., he also may not claim a child tax credit for T.M. in 2012. See Allred v. Commissioner, T.C. Memo. 2014-54 slip op. at *14. IV. Head of Household Filing Status Section 1(b) provides a special tax rate for an individual who qualifies as a head of household. As pertinent here, section 2(b)(1) provides that an unmarried individual "shall be considered head of household" if that individual "maintains as his home a household which constitutes for more than one-half of such taxable year the principal place of abode" of "(i) a qualifying child 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 of the individual (as defined in section 152(c), determined without regard to section 152(e))." Above we found that T.M. was not 4 Petitioner's qualifying child due to section 152(e). 5 Disregarding section 152(e), we now look to section 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 152(c). Section 152(c) provides that a qualifying child must meet the following four statutory requirements: Relationship.-The individual (dependent) is the taxpayer's child, a descendant of the taxpayer's child, the taxpayer's brother, sister, step- brother, or stepsister or a descendant of any such relative. Sec. 152(c) (1) (A),(2). Residence.-The individual has the same principal place of abode as the taxpayer for more than one-half of such taxable year. Sec. 152(c) (1) (B). Age.-The individual must not have attained the age of 19 or must be a student who has not attained the age of 24. Sec. 152(c) (1) (C), (3) (A). Support.-The individual has not provided over one-half of the individual's own support. Sec. 152(c)(1)(D). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 The parties do not dispute that T.M. was 2 Petitioner's son, who was under the age of 19. They 3 are disputing whether T.M. lived with Petitioner for 4 more than half of the year. Petitioner testified 5 6 7 convincingly that he maintained the same principal abode as T.M. for half the year. However, Petitioner did not testify or provide evidence that T.M. lived 8 with him for more than half the year. The Circuit 9 Court of Cook County, Illinois issued an order regarding visitation. This order does not support T.M. living with Petitioner for more than half the year. Therefore, T.M. is not a qualifying child. We find that Petitioner is not entitled to claim head of household filing status. V. Conclusion Any contentions we have not addressed are irrelevant, moot or meritless. We sustain the deficiency by Respondent and a decision will be entered for Respondent. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 11:31 a.m., the above- entitled matter was concluded.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com