TAX COURT OPINION

Case: Michael Shawn Lynch
Docket Number: 4579-08
Judge: Colvin
Opinion Type: bench
Filed: 06/09/2009
Pages: 10

UNITED STATES TAX COURT Evtlm " - WASHINGTON , DC 2021 7 MICHAEL SHAWN LYNCH , Petitioner , V . Docket No . 4579-08 . COMMISSIONER OF INTERNAL REVENUE , Respondent . 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 copy of the pages of the transcript of the trial in the above case before Judge David Gustafson at Jacksonville, Florida, on May 6, 2009, containing his oral findings of fact and opinion rendered at the conclusion of the trial . In accordance . with the oral findings of fact and opinion, decision will be entered for respondent . (Signed ) David Gustafson Judge Dated : Washington, D .C . June 9, 2009 'SERVED UN 10 2009 3 1 Bench Opinion by Judge David Gustafson May 6, 2009 2 Lynch v . Commissioner Docket No . 4579-08 3 THE COURT : The Court has decided to render ora l 4 findings of fact and opinion in this case, and th e 5 following represents the Court's oral Findings of Fact 6 and Opinion . 7 The oral Findings of Fact and opinion shall not be 8 relied on as precedent in any other case . 9 This Bench opinion is made pursuant to the 10 authority granted by section 7459(b) of the Interna l 11 Revenue Code of 1986, as amended, and Rule 152 of the Tax 12 Court Rules of Practice and Procedure . 13 By a statutory notice of deficiency date d 14 December 31, 2007, respondent determined a deficiency in 15 the Federal income tax of petitioner Michael Shawn Lynch 16 for the year 2006, in the amount of $5,105 . 17 The issue in dispute is Mr . Lynch's entitlement to 18 dependency exemptions and child tax credit for his three 19 daughters, whom we will refer to by their initials J .L ., 20 A .L ., and M .L ., to protect their privacy . For the 21 reasons explained hereafter, we will sustain the 22 deficiency assessed against Mr . Lynch . 23 Trial of this case was conducted on May 5, 2009, 24 in Jacksonville, Florida . Mr . Lynch testified . Th e 25 parties' Stipulation of Facts, with Exhibits 1-J through Heritage Reporting Corporatio n (202) 628-4888 4 1 8-J, was admitted into evidence and is incorporated 2 herein . We find the following facts : 3 Findings 4 Mr . Lynch has three daughters . Two of them -- 5 J .L . and A .L . -- are from his previous marriage to Eva 6 ("Laurie") Lynch, which marriage ended in divorce . The 7 divorce decree (which was not offered into evidence) made 8 no provision as to which ex-spouse would be entitled, for 9 federal income tax purposes, to claim the dependenc y 10 exemption for either of the children . During 2006 Laurie 11 Lynch, J .L ., and A .L . did not live with Mr . Lynch bu t 12 resided in Alabama . 13 Mr . Lynch's third daughter -- M .L . -- is from his 14 current marriage to Melissa Lynch . However, Mr . Lynch 15 and his current wife have been estranged for severa l 16 years, but are not yet divorced . 17 A custody order entitles Mr . Lynch to joint 18 custody of M .L ., and specifies that he is entitled to 19 have custody in the summer, on weekends, and on various 20 holidays . (The custody order was not offered int o 21 evidence . ) 22 During 2006 Melissa Lynch and M .L . did not live 23 with Mr . Lynch but resided in Indiana . Mr . Lynch does 24 not know exactly where they are (he pays his chil d 25 support through the court), and he is therefore deprived Heritage Reporting Corporatio n (202) 628-4888 5 1 of his right to joint custody of M .L . 2 The record includes no evidence of any agreement 3 between Mr . Lynch and Melissa Lynch as to which of them 4 would be entitled, for federal income tax purposes, to 5 claim the dependency exemption for M .L . 6 Mr . Lynch testified that he is the sole source of 7 financial support for his third daughter M .L . and that he 8 "takes care" of the other two financially . Responden t 9 offered no counter-evidence, and we assume that Mr . Lynch 10 provided most or all of the financial support for each of 11 the children . 12 Mr . Lynch timely filed a tax return for 2006 . On 13 his 2006 return he claimed his three daughters a s 14 dependents, and claimed a child tax credit of $3,000 on 15 line 53 . Mr . Lynch did not attach to that return any 16 statement by either Melissa Lynch or Laurie Lynch that 17 she would not claim any of the daughters as a dependent 18 on her return . 19 Despite the financial support Mr . Lynch provides 20 for the children, he is unable to obtain the cooperation 21 of their mothers in enabling him to claim the dependency 22 exemptions and child tax credit . 23 On December 31, 2007, the IRS issued to Mr . Lynch 24 a notice of deficiency . That notice disallowed the three 25 dependency exemptions and disallowed the $3,000 child tax Heritage Reporting Corporatio n . (202) 628-4888 6 1 credit he claimed . 2 Mr . Lynch timely filed his petition in this Court 3 on February 22, 2008 . He resided in Orange Park , 4 Florida, when he filed his petition in this suit . 5 Opinion 6 The IRS's determination is presumed correct, and 7 the taxpayer bears the burden to prove his entitlement to 8 the exemptions and credits he claimed . Rule 142(a) ; 9 Welch v . Helvering , 290 U .S . 111, 115 (1933) . 10 Section 151(a) of the Internal Revenue Cod e 11 provides for a deduction for certain exemption amounts . 12 Section 151(c) allows an exemption for "each individual 13 who is a dependent (as defined in section 152)" . The 14 general definition requires that, in order to be a 15 "dependent" of the taxpayer, a child must have "the same 16 principal place of abode as the taxpayer for more than 17 one-half of" the tax year . Sec . 152(c)(1)(B) . 18 Section 24 provides for a tax credit for "each 19 qualifying child of the taxpayer" ; and the statute looks 20 to that same definition . Section 24(c)(1) provides that 21 "[t]he term 'qualifying child' means a qualifying child 22 of the taxpayer (as defined in section 152(c))" . 23 Thus, the child tax credit, like the dependency 24 exemption, depends on a child's sharing the "principal 25 place of abode" of the taxpayer . Heritage Reporting Corporation (202) 628-4888 I 7 1 Mr . Lynch's daughters were all in the physical 2 custody of their mothers and did not share Mr . Lynch' s 3 abode . Thus, under the general rule, Mr . Lynch would not 4 be eligible for the dependency exemptions or the chil d 5 tax credit for his daughters . 6 However, in section 152(e) the Code includes a 7 "Special Rule for Divorced Parents, Etc ." (In 2006 th e 8 law in effect was section 152(e) after amendments made in 9 2004, and the corresponding regulations as in effec t 10 before amendments made in 2008 .) That rule could apply 11 to Mr . Lynch if "the custodial parent [i .e ., Laurie Lynch 12 or Melissa Lynch] signs a written declaration * * * that 13 such custodial parent will not claim such child as a 14 dependent for any taxable year beginning in such taxable 15 year . " Sec . 152 (e) (e) (2) (A) . 16 The Tax Court is required to apply the law as 17 passed by Congress, and that law requires a "written 18 declaration" signed by the custodial parent . The law 19 thus requires that, in order to obtain the dependency 20 exemption and child tax credit for his daughters , 21 Mr . Lynch must have attached to his return a "written 22 declaration" signed by Melissa Lynch or Laurie Lynch as 23 custodial parent . He did not do so . 24 Mr . Lynch argues, however, that in the alternative 25 he should be considered the custodial parent of M .L ., on Heritage Reporting Corporatio n (202) 628-4888 8 1 the theory that custody should mean legal custody and 2 that one parent's violation of a court's custody order 3 should not deprive the other parent of the right s 4 (including tax benefits) that he should otherwise enjoy . r 5 He argues that his right to custody of M .L . during 6 summers, weekends, and holidays could add up to a 7 majority of the year, and that he is therefore th e 8 rightful custodial parent and does not need his estranged 9 wife's written declaration . 10 For two reasons, this argument fails . First , 11 Mr . Lynch did not establish the factual predicate for the 12 argument . He did not produce the custody order bu t 13 testified as to its provisions, and his specifi c 14 testimony does not support his broad argument that he 15 might have had a right to custody for more than half of 16 the year (i .e ., for at least 183 days) . 17 Rather, he testified that he had the right t o 18 custody of M .L . on summers, weekends, and holidays . For 19 this purpose, we can assume that a "summer" might consist 20 of as much as 3 full months -- June, July, and August -- 21 totaling 92 days (with no interruption for M .L . to visit 22 her mother) . We can also assume Mr . Lynch has rights to 23 a 2-day, 2-night weekend for each of the other 40 weeks 24 of the year, without exception, totaling 80 full days . 25 Even on these improbable assumptions, the total of Heritage Reporting Corporatio n (202) 628-4888 9 1 "summer" and "weekends" is only 172 days . He would then 2 need no fewer than 11 holidays -- i .e ., holidays that do 3 not fall during summer or weekends -- to bring his total 4 to 183, and he did not testify to this number o f 5 holidays . 6 Moreover, in the absence of the court orde r 7 itself, we would not credit his self-serving testimony to 8 that effect . He did not prove that he had a legal right 9 to custody of M .L . for more than half of the year . 10 Second, even if Mr . Lynch did have legal custody 11 of M .L . for more than half the year, the fact that he had 12 no physical custody of her defeats his argument that he 13 is the custodial parent . Section 1 .152-4(b) of th e 14 regulations (as in effect for 2006) reads as follows : 15 "Custody", for purposes of this section, will 16 be determined by the terms of the most recent decree of 17 divorce or separate maintenance, or subsequent custody 18 decree, or, if none, a written separation agreement . In 19 the event of so-called "split" custody , or if neither a 20 decree or agreement establishes who has custody, or the 21 validity or continuing effect of such decree or agreement 22 is uncertain by reason of proceedings pending on the last 23 day of the calendar year, "custody" will be deemed to be 24 w ith the parent who, as between both parents, has th e 25 physical custody of the child for the greater portion of Heritage Reporting Corporatio n (202) 628-4888 1 the calendar year . 2 Thus, physical custody governs the definition in a 3 situation like the Lynches' . Mr . Lynch did not have 4 physical custody of M .L . (nor of J .L . and A .L .), was not 1 0 5 their custodial parent, and needed the writte n 6 declaration from their mothers in order to claim the 7 dependent exemptions and child tax credits . 8 This may feel like an unfair outcome to the 9 noncustodial parent who provides most or all of the 10 financial support for a child but cannot obtain the 11 cooperation of the custodial parent . 12 However, in section 152 Congress has created 13 several objective tests that draw bright lines . Th e 14 alternative would be rules that are sensitive to the wide 15 variety of family circumstances, but such sensitive rules 16 would be difficult for the IRS and the courts t o 17 administer, and such sensitive rules would effectively 18 require Government intrusion into delicate family matters 19 and intractable human problems . " 20 That may be why Congress stopped where it did in 21 making exceptions to the "place of abode" requirement of 22 section 152 (c) (1)(B) . In any event, the rule o f 23 section 152(e)(2) is explicit, and it requires that a 24 noncustodial parent in Mr . Lynch's circumstance wh o 25 wishes to claim a dependency exemption and a child tax Heritage Reporting Corporatio n (202) 628-4888 1 1 1 credit must file the custodial parent's "written 2 declaration" agreeing to the claim . 3 Mr . Lynch was unable to meet this requirement, and 4 he is therefore not eligible for the exemption or the 5 credit . Consequently, the deficiency as determined by 6 respondent will be sustained . 7 This concludes the Court's oral Findings of Fact 8 and Opinion in this case . 9 (Whereupon, at 12 :41 p .m ., the bench opinion in 10 the above-entitled matter was concluded . ) 1 1 12 13 14 // 1 5 16 17 18 19 20 2 1 22 23 2 4 25 Heritage Reporting Corporation (202) 628-4888