TAX COURT OPINION

Case: John M. LoSecco
Docket Number: 3394-15S
Judge: Whalen
Opinion Type: bench
Filed: 03/17/2016
Pages: 11

UNITED STATES TAX COURT WASHINGTON, DC 20217 JOHN M. LOSECCO, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) ) ORDER Docket No. 3394-15S 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 proceedings in the above-case before the undersigned at Chicago, Illinois, containing the oral findings of fact and opinion rendered on February 10, 2016. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Laurence J. Whalen Judge Dated: Washington, D.C. March 17, 2016 . SERVED MAR 2 1 2016 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 Capital Reporting Company Bench Opinion by Judge Laurence J. Whalen February 10, 2016 John M, . LoSecco v. Commissioner 3 LJW jbd Docket No. 3394-15s 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. II. This proceeding was heard as a Small Tax Case pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax court Rules of Practice and Procedure. Hereinafter, all section references are to the Internal Revenue Code, as amended, and in effect for 2011, the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Pursuant to section 7463(b), the decision to be entered in this case cannot be reviewed in any other court, and this bench opinion shall not be treated as precedent for any other case. III. This bench opinion is made pursuant to the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 authority granted by section 7459(b) and rule 152. IV. Mr. John M. LoSecco appeared in these I proceedings on his own behalf, and K. Elizabeth 5 Kelly, attorney at law, appeared on behalf of 6 7 8 9 10 11 12 13 14 15 respondent. V. Respondent issued a Notice of Deficiency to petitioner in which he determined a deficiency of $2,071 in petitioner's Federal income tax for taxable year 2011. The deficiency is based upon the disallowance of the dependency exemptions that petitioner claimed for his two children. VI. The issue for decision in this case is 16 whether each of petitioner's children is a 17 18 19 20 21 22 23 24 25 "qualifying child", as defined by sections 152 (c) and (e), such that petitioner is allowed a deduction for the exemption amount under section 151(c) for taxable year 2011. VII. Some of the facts have been stipulated by the parties, and are so found. Petitioner resided in South Bend, Indiana, when he filed his petition in this case. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 Petitioner and his former spouse, Ms. Lynne Sterkin-LoSecco, were married on November 21, 2986. Two children were born to them during their marriage. They were divorced by a Decree of dissolution of 5 Marriage entered on November 17, 2009, by the St. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Joseph Superior Court in the State of Indiana (hereinafter "Decree of Dissolution"). The Decree of Dissolution granted both legal and physical custody of the two minor children to the wife, and it required petitioner to pay for their support, to maintain healthcare coverage on the children, and to pay certain post-secondary and secondary education expenses for the children. The Decree of Dissolution also required the wife to release and sign over the tax exemptions for both children. Ordered paragraph number 15 of the Decree of Dissolution provides as follows: "Starting with the 2010 tax year and each year thereafter, Wife shall release and sign over to Husband the exemptions for *** [daughter] and *** [son] utilizing the appropriate federal tax forms so lon'g as Husband is current on his child support obligation, secondary education and most-secondary education 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 expense obligations by December 31 of each tax year for which such exemptions are to be claimed by Husband. Wife shall release and sign over to Husband the exemptions for said children by January 31 of the year following the tax year for which Husband is entitled to take the children as exemptions. If Husband is not current on his child support obligations, his secondary education obligation or post-secondary obligation by December 31 of the tax year for which such exemption is to be claimed by Husband, Wife shall take *** [son] and *** [daughter] as tax exemptions for that year." During the year 2011, neither of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 petitioner's children lived with him for one-half or 19 more of the year. The parties do not dispute the 20 21 fact that for 2011 petitioner was the "non-custodial parent," as defined by section 152(e)(4) (B), and 22 petitioner's former spouse was the "custodial 23 24 25 parent," as defined by section 152(e)(4) (A), of both children. It appears that for 2011 petitioner was 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 current on his child support obligations and his obligation to pay secondary and post-secondary education expenses. Nevertheless, his former spouse refused to execute a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, for the year. Petitioner filed a timely income tax return for the year, and on that return he claimed both of the children as dependents, as defined by section 152. Petitioner did not attach to his 2011 return a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or an equivalent written declaration, that was executed by his former spouse. The record of this case does not disclose whether the former spouse claimed the dependent exemption for one or both of the children. Petitioner sued his former spouse in small claims court for her refusal to execute a Form 8332 for 2011 with respect to the children. The court dismissed the case on the ground that the suit should have been brought in divorce court. Petitioner never brought a similar suit in divorce court. VIII. Dependency Exemption Deduction: Generally, an individual is allowed a deduction for an exemption 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.Capita1ReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 for "each individual who is a dependent (as defined in section 152) of the taxpayer for the taxable year." Sec. 151(c). Section 152(a) defines the term "dependent" to include "a qualifying child". Pursuant to section 152(c), a "qualifying child" 6 must: (i) bear a specified relationship to the 7 8 taxpayer, such as the taxpayer's child, (ii) have the same principal place of abode as the taxpayer for 9 more than one-half of the taxable year, (iii) meet 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 certain age requirements, (iv) not have provided over one-half of such individual's own support for the taxable year at issue; and, (v) not have filed a joint return for the year. Sec. 152(c)(1). In the case of divorced parents, special rules set forth in section 152(e) determine which parent may claim a dependence exemption deduction for a child. Section 152(e) permits a non-custodial parent, under certain circumstances, to claim a dependency exemption for a child. In particular, section 152(e)(2) allows the non-custodial parent to claim a dependency exemption for a child if: "(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and (B) the non-custodial parent attaches such written declaration to the non-custodial parent's return for the taxable year beginning during such calendar year." Such a declaration must unconditionally release the custodial parent's claim to the child as a dependent and must specify the year or years for which the declaration is effective. Sec. 1.152-4(e)(1)(I), Income Tax Regs. The non-custodial parent must attach a copy of the written declaration to the, non- custodial parent's Federal income tax return for each taxable year for which the child is claimed as a dependent. Sec. 1.152-4(e)(2), Income Tax Regs. The written declaration required by section 152(e)(2) must be made by the custodial parent either on Form 8332 or in a statement conforming to the substance of that form. See Miller v. Commissioner, 114 T.C. 184, 190-191 (2000), aff'd on another ground sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Cir. 2002). 25 In summary, in order for a child to be the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 qualifying child of his or her non-custodial parent, the custodial parent must sign Form 8332 or other 3 writing conformirrg to the substance of Form 8332, 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 releasing the custodial parent's claim to the dependency exemption. Sec. 152 ( e) (2) (A) . The non- custodial parent must then attach the Form 8332 or equivalent writing to his or her Federal income tax return. Sec. 152 (e) (2) (B) ; Miller v. Commissioner, supra at 188-189; Brissett v. Commissioner, T. C. Memo. 2003-210. IX. What we said in the following passage of our opinion i Chamberlain v. Commissioner, T. C. LJW ibd. Memo. 2007-178 at *8-*9 applies to this case: "Although we are sympathetic with petitioner' s plight, "we are bound by the wor ing of the statute as LJWhbd enacted and the accompanying r.egulations, when consistent therewith." Michaels v. Commissioner, , 87 T. C. 1412 manifested through' its / accompanying regulatións, is unambiguous It grants the dependency L.J exemption to a non-custodial parent only when he or she attaches a valid 866.488.DEPO www.CapitalReportingCompany.com 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 Capital Reporting Company 11 Form 8332 or its equivalent to a Federal income tax return for the taxable year in which he or she claims the exemption. Congress added .this written declaration requirement to section 152(e) in 1984 to provide more certainty to the "often subjective and *** difficult problems of proof and substantiation" that accompanied ·dependency exemption disputes under .the prior statute. H. Rept. 98-432 (Part 2), at 1498 (1984). Congress ,sought clarity as to which of two divorced parents would receive the dependency exemption for a taxable .year and .assempe-ased it by ACCOMP SÁM -conditioning the non-custodial parent's claim upon the written verification aof the custodial parent's release of his or her claim. To preserve _Congress' goal, we must insist on .strict adherence to the requirements .of section 152. Miller v. Commissioner, [114 T.C. 184] at 196; Bramante v. Commissioner, T.C. Memo. 2002-228. 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 12 Accordingly, we sustain respondent's disallowance of the dependency exemption and child tax credit claimed by petitioners for taxable year 2003." x. LJW For the reasons set forth above,. decision shall be entered for respondent. XI. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 8:12 a.m., the above- entitled matter was concluded.) 1 2 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com