TAX COURT OPINION

Case: James P. Wilson
Docket Number: 1233-17
Judge: Thornton
Opinion Type: bench
Filed: 12/19/2017
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 JAMES P. WILSON, Petitioner, ) ) ) v. ) Docket No. 1233-17. 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 Michael B. Thornton at Cleveland, Ohio, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the óral findings of fact and opinion, decision will be entered for respondent. (Signed) Michael B. Thornton Judge Dated: Washington, D.C. December 19, 2017 SERVED DEC 2 1 2017 Bench Opinion by Judge Michael B. Thornton December 5, 2017 3 James P. Wilson v. Commissioner of Internal Revenue Docket No. 1233-17 THE COURT: 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. Except as otherwise provided by Rule 152(c) of the Tax Court Rules of Practice and Procedure, the oral 1 2 3 4 5 6 7 8 9 10 findings of fact and opinion shall not be relied upon as (cid:16)042 11 precedent in any other case. 12 This bench opinion is made pursuant to the I 13 authority granted by section 7459(b) and Rule 152. 14 Hereinafter in this bench opinion, section references are 15 to the Internal Revenue Code in effect for the taxable 16 year at issue. All rule references are to the Tax Court 17 Rules of Practice and Procedure. All monetary amounts 18 are rounded to the nearest dollar. 19 This case was tried on December 4, 2017, in 20 Cleveland, Ohio. Mr. Alan I. Silver appeared on behalf of 21 petitioner. Mr. John D. Davis appeared on behalf of 22 respondent. 23 By notice of deficiency, respondent determined a 24 deficiency in petitioner's 2014 Federal income tax of 25 $1,592. In the notice of deficiency respondent disallowed (973)406-2250joperationseescrGesmet|wwwascribetsmet a dependency exemption deduction and the child tax credit. While residing in Ohio, petitioner timely filed 4 a petition. The issues for decision are whether petitioner is entitled to (1) a dependency exemption deduction and (2) the child tax credit. Some of the facts have been stipulated. The stipulation of facts and the attached exhibits are incorporated by this reference. Findings of Fact Petitioner and his former spouse had one child, 1 2 3 4 5 6 7 8 9 10 11 12 J.W., who was under the age of 19 in 2014. (Pursuant to 13 Rule 27(a)(3) the Court refers to minors by their 14 15 initials.) Petitioner and his former spouse divorced in 2001. In an agreed judgment entry, dated May 1, 16 2001, the Court of Common Pleas, Division of Domestic 17 Relations, Medina County, Ohio, adopted the written 18 separation agreement entered into between petitioner and 19 his former spouse and also dated May 1,' 2001. The 20 agreed judgment entry states that a copy of the 21 22 23 separation agreement is to be attached as an exhibit thereto and is "to be incorporated herein as if fully rewritten and its terms are hereby ordered into 24 execution." The separation agreement designates 25 petitioner's former spouse as the residential parent (973)406,1250|operationseescribetsmet|wwwascdbersmet 5 1 2 3 4 5 6 7 8 9 and legal custodian of J.W. The separation agreement also provides that petitioner is entitled to claim J.W. as a dependent for even years from 2002 onward, but states that petitioner "shall not have the right to claim said child if he incurs a child support arrearage for the respective tax year." The separation agreement was signed by both petitioner and his former spouse. During 2014 petitioner was the noncustodial parent of J.W. and made all of the required child support 10 payments. 11 Petitioner timely filed his 2014 Form 1040, 12 U.S. Individual Income Tax Return, claiming a dependency 13 14 15 16 17 exemption deduction and the child tax credit with respect to J.W. Petitioner's former spouse also claimed the dependency exemption deduction for J.W. on her 2014 tax return. Petitioner provided a Form 8332, 18 Release/Revocation of Release of Claim to Exemption for 19 Child by Custodial Parent, signed by his former spouse 20 on February 3, 2003, releasing the dependency exemption 21 deduction for J.W. for 2002. Part ·II of the Form 8332 22 23 24 states that petitioner's former spouse agrees not to claim J.W. as a dependent for "ALL FUTURE EVEN YEARS - 2004, 2006, 2008, 2010". Part II of the Form 8332 is not 25 signed by petitioner's former spouse. Opinion 6 2 3 4 5 6 7 8 9 The Commissioner's determinations in a notice of deficiency are generally presumed correct, and the taxpayer bears the burden of proving those determinations erroneous by a preponderance of the evidence. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Deductions and credits are a matter of legislative grace, and the taxpayer bears the burden of proving that he or she is entitled to any deduction or credit claimed. Rule 10 142(a); Deputy v. du Pont, 308 U.S. 488, 493 (1940); New 11 Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). 12 Pursuant to section 7491(a)(1), the burden of proof as to 13. factual matters may shift from the taxpayer to the 14 Commissioner under certain circumstances. Petitioner 15 does not allege that section 7491(a) shifts the burden of 16 proof to respondent, nor does the record establish that 17 petitioner satisfies the prerequisites under section 7491 18 for any such burden shift. 19 An individual is allowed a deduction for an 20 exemption for "each individual who is a dependent (as 21 defined in section 152) of the taxpayer for the taxable 22 23 year." Sec. 151(c). Section 152(a) defines the term "dependent" to include a "qualifying child". Generally, 24 as relevant here, a "qualifying child" must have the same 25 principal place of abode as the taxpayer for more than P73)406-2250|operationseescribetsmet|wwv,Ascribers.net 7 one-half of the taxable year. Sec. 152(c)(1). Because J.W. resided with petitioner's former spouse during most of 2014, J.W. and petitioner did not share the same principal abode for more than one-half of the taxable year. Accordingly, J.W. was not petitioner's "qualifying child". Section 152(e)(1) provides a special rule for divorced parents, which permits a noncustodial parent, under certain circumstances, to claim a dependency 1 2 3 4 5 6 7 8 9 10 exemption deduction for a child. See sec. 152 (e) ; 11 Espinoza v. Commissioner, T.C. Memo. 2011-108; sec. 12 1.152-4T(a), Q&A-2, Temporary Income Tax Regs., 49 Fe'd. 13 Reg. 34459 (Aug. 31, 1984). 14 15 As relevant here, the key requirements of' section 152(e)(2) are that the custodial parent must 16 sign a written declaration that he or she will not claim 17 the child as a dependent and the noncustodial parent must 18 attach that declaration to his tax return for the year in 19 question. 20 21 22 Form 8332 is the IRS form that is normally used as the written declaration. Although taxpayers are not required to use Form 8332 for this purpose, any other 23 written declaration executed by the custodial parent must 24 25 conform to the substance of Form 8332. See sec. 1.152- 4T(a), Q&A-3, Temporary Income Tax Regs.; Miller v. (973)406-2250loperationsøescribers.net|wwwAscdbersmet 8 Commissioner, 114 T.C. 184, 190-191 (2000), aff'd sub' nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir. 2002) . Section 152 (e) allows a noncustodial parent to . cl·aim a dependency exemption deduction only when that parent attaches Form 8332 or its equivalent to his Federal income tax return for the year for which he claims the deduction. See, e.g., Cappel v. Commissioner, T.C. Memo. 2016-150. Petitioner claims, and respondent disputes, that a copy of the Form 8332 was attached to petitioner's 2014 Form 1040. Petitioner did not offer the 2014 Form 1040 into evidence and has not otherwise carried his burden to prove that the Form 8332 was attached to his 2014 Form 1040. - But even if petitioner had attached the Form 8332 dated February 3, 2003, to his 2014 tax returb, it only released the claim to the exemption for 2002 and not for any future years. Indeed, petitioner's former spouse did in fact claim J.W. as her dependent on her 2014 tax return. In the alternative, petitioner relies upon the separation agreement which grants petitioner the right to claim the dependency exemption deduction for J.W. in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 even years on the condition that he is current in his 24 child support obligations. The evidence in the record 25 does not conclusively establish that either the (973)406-2250|operationseescrbersmet|wwwascribers.net 9 separation agreement or the agreed judgment entry was attached to petitioner's 2014 Form 1040. But even if these documents were attached to petitioner's 2014 Form 1040, they would not suffice as a substitute for a properly completed and signed Form 8332. We have previously held that a substitute for a Form 8332 that does not conform to the substance of Form 8332 does not comply with section 152(e)(2) (A). 2CMO-\\ Commissioner, T.C. Memo. J441. See Thomas v. Furthermore, we have 1 2 3 4 5 6 7 8 9 10 specifically held under similar circumstances that a 11 substitute Form 8332 that fails to unconditionally 12 declare that the custodial parent will not claim the 13 child as a dependent for the year at issue does not 14 comply with Form 8332 even'.where the condition has been 15 met. Armstrong v. Commissioner, 139 T.C. 468, 473-476 16 17 (2012) (State court order, signed by custodial parent, conditioned dependency exemption deduction on 18 noncustodial parent's payment of child support). 19 Because the separation agreement conditions petitioner's 20 ability to claim the dependency exemption deduction on 21 22 23 the payment of child support, it does not meet the requirements for a written declaration as set forth in section 152(e)(2). Accordingly, petitioner is not 24 entitled to a dependency exemption deduction for J.W. 25 for the 2014 taxable year. 973)406-2250|operationseescribers.net!www4scribersnet 1 2 3 4 5 6 7 8 9 - Section 24(a) provides a tax credit for each "qualifying child" of the taxpayer. Under section 24(c) a "qualifying child" is a child who has not attained the age of 17 for whom the taxpayer is allowed a dependency exemption deduction under section 151. Because petitioner is not entitled to a dependency exemption deduction under section 151 for J.W., he is not allowed a child tax credit for J.W. To give effect to the foregoing, decision will 10 be entered for respondent. 11 This concludes the Court's findings of fact and 12 opinion in this case. 13 14 15 16 17 18 19 20 21 22 23 24 25 (Whereupon, at 1:13 p.m., the above-entitled matter was concluded.) $73)406-2250|operations@escribersmet|www.escelbers.net