TAX COURT OPINION

Case: John P. & Maryann Sender
Docket Number: 5563-12
Judge: Morrison
Opinion Type: bench
Filed: 03/18/2013
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 JOHN P. AND MARYANN SENDER, ) Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent RMM ) ) ) Docket No. 5563-12. ) ) ) ) ORDER OF SERVICE OF TRANSCRIPT Pursuant to Rule 152(b), Tax Court Rules of Practice of Procedure, there is transmitted herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the above case before Judge Richard T. Morrison, at Cleveland, Ohio, on February 28, 2013, 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) Richard T. Morrison Judge Dated: Washington, D.C. March 18, 2013 SERVED MAR 1 9 2013 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Bench Opinion by Judge Richard T. Morrison February 28, 2013 John P. and Maryann Sender v. Commissioner Docket No. 5563-12 THE COURT: The Court had 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. The oral findings of fact and opinion shall not be relied on as precedent in any other case. References to sections are to the Internal Revenue Code in effect for the taxable year 2008. References to rules are to the Tax Court Rules of Practice and Procedure. The Respondent determined a deficiency of $1,525 in the Petitioners' federal income tax for the 2008 taxable year. The deficiency results from the Respondent's disallowance of a dependency-exemption deduction that the Petitioners claimed for the son of 20 Mr. Sender and his ex-wife, Ms. Sharon Flynn. The 21 22 23 24 25 Respondent further disallowed the Petitioners' claimed child tax credit for the son. The issues for decision are: (1) whether the Petitioners are entitled to a dependency-exemption deduction for the son 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 10 11 notwithstanding the fact that they did not attach Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, signed by the "custodial parent" of the son for their 2008 taxable year; and (2) whether the Petitioners are entitled to a child tax credit for the taxable year at issue. We hold for the Respondent on both issues. Findings of Fact The stipulation of facts and the attached exhibits are incorporated by this reference. The 12 Petitioners resided in Ohio at the time the petition 13 14 15 16 17 18 19 20 21 22 23 24 25 was filed. Mr. Sender was divorced from Sharon A. Flynn pursuant to a 2000 state court judgment. The 2000 judgment provided that Mr. Sender was entitled to claim the son as a.dependent for tax purposes for the 1999 taxable year and all years thereafter. The 2000 judgment provides that Mr. Sender and Ms. Flynn have the rights and responsibilities set forth in a shared parenting plan that was attached to the judgment and was incorporated in the judgment by reference. The judgment was signed by Ms. Flynn. A related agreement, the related shared parenting plan, provided that Mr. Sender shall claim the son as an exemption on his tax return beginning 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 with the taxable year 1999. The agreement and plan 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 also provided that Ms. Flynn would provide all appropriate IRS documents to effectuate the agreement that Mr. Sender would claim the son as an exemption. In 2004, another state court judgment (by the same court in the same case) provided that Mr. Sender is entitled to claim the son as a dependent for tax purposes for the 2004 taxable year and thereafter if Mr. Sender is current in child-support payments. The 2004 judgmen-t was not signed by Ms. Flynn. ' The Petitioners filed a Form 1040, U.S. Individual Income Tax Return, for 2008. They claimed a dependency-exemption deduction and a child tax credit for the son. They did not attach a Form 8332 to the return. Mr. Sender sent a copy of the 2000 'judgment to the counsel for the Respondent shortly before trial. . Discussion I. Burden of Proof. Generally, the Respondent's determinations are presumed correct, and the taxpayer bears the burden of proving that those determinations are erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Under section 7491(a) (1), the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 burden of proof may shift from the taxpayer to the Respondent if the taxpayer produces credible evidence 3 with respect to any factual issue relevant to 4 5 6 7 8 9 10 11 12 13 14 15 16 17 ascertaining the taxpayer's liability. The findings of fact in this Bench Opinion are based on the preponderance of the evidence; therefore, it is unnecessary to determine who bears the burden of proof. Martin Ice Cream v. Commissioner, 110 T.C. 190, 10 (1998) . See also Kean v. Commissioner, 91 A T.C. 575, 601 n. 40 (1988) (citing Deskins v. Commissioner, 87 T.C. 305, 323 n. 17 (1986)). II. Dependency-Exemption Deduction A taxpayer may claim an exemption "for each individual who is a dependent (as defined in section 152) of the taxpayer for the taxable year." Sec. 151(a)gc). Section 152(a) defines a dependent to include a "qualifying child". A qualifying child 18 must, among other things, share the same principal 19 20 21 22 23 24 25 p·lace of abode as the taxpayer for more than one-half of the year in issue. Sec. 152 (c) (1) (B) . No one claims that the son shared with Mr. Sender the same principal place of abode during any period of the 2008 taxable year. Under section 152 (e) (1), however, there is a special rule for divorced or legally separated 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 parents which permits a noncustodial parent, under certain circumstances dependency-exemption deduction for a child. Section 152 (e) (2) provides that the special rule is available only if the custodial parent signs a written declaration (in such 6 manner and form as the Treasury Secretary may by 7 regulations prescribe) that such custodial parent 8 will not claim such child as a dependent for the 9 taxable year, and the noncustodial parent attaches 10 11 12 13 14 this written declaration to the noncustodial parent's return for the taxable year. The declaration required by section 152(e) (2) must be made on either Form 8332 or on a statement conforming to the substance of that form. 15 Miller v. Commissioner, 114 T.C. 184, 189 (2000), 16 aff'd on another ground sub nom.·' Lovejoy v. 17 18 19 20 21 22 23 Commissioner, 293 F.3d 1208 (10th Cir. 2002); see sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg. 34451, 34459 (Aug. 31, 1984) . Form 8332 requires a taxpayer to furnish (1) the name of each child; (2) the name and Social ecurity number of the noncustodial parent claiming the dependency-exemption deduction; (3) the Social 24 Security number of the custodial parent; (4) the 25 signature of the custodial parent; (5) the date of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 the custodial parent's signature; and (6) the year or years for which the claims were released. See Miller v. Commissioner, 114 T.C. at 190. "The exemption may be released for a single year, for a number of specified year (for example, alternate years), or for 6 all future years, as specified in the declaration." 7 8 9 10 11 12 13 14 15 16 Sec. 1.152-4T-(a), Q&A-4, Temporary Income Tax Regs., supra. ' It is conceivable that a divorce order or a divorce-related agreement signed by the custodial parent can constitute the written declaration required by section 152(e) (2). See Boltinghouse v. Commissioner, T.C. Memo. 2003-134 (holding a separation agreement conformed with the substance of Form 8332). For taxable years starting after July 2, 2008, a court order signed by the custodial parent 17 Éill not satisfy section 152(e) (2). 26 C.F.R. 18 section 1.152-4 (e) (1) (ii) (2008), as amended by the 19 (cid:16)040.D.9408, 2008-2 C.B. 323, 327 ("A written 20 declaration not on the form designated by the IRS 21 must conform to the substance of that form and must 22 23 24 25 be a document executed for the sole purpose of serving as a written declaration under this section. A court order or decree or a separation agreement may not serve as a written declaration"). However, this 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 special rule does not govern the Petitioners' 2008 taxable year, which started on January 1, 2008. ! For a court order to qualify as a written declaration under section 152(e) (2), in the circumstances of this case, it cannot condition the 6 waiver of the exemption by the custodial parent on 7 8 9 10 11 12 13 14 15 the noncustodial parent's payment of child support. Armstrong v. Commissioner, 139 T.C. , (slip op. åt 13) (Dec. 19, 2012); see also Gessic v. Commissioner, T.C. Memo. 2010-88, 2010 Tax Ct. Memo LEXIS 93 at *8 ("[T]he Internal Revenue Service cannot be expected to police divorce decrees and separation agreements or determine taxpayer compliance therewith . ") . No Form 8332 was attached to the 16 Petitioners' 2008 tax return. The record does not 17 18 19 20 21 22 23 24 25 show that a Form 8332 was ever signed by Ms. Flynn. 'I'he Petitioners contend that the 2000 judgment, which as signed by Ms . Flynn, and which was not conditioned on Mr. Sender's fulfillment of his child support-support obligations, qualified as a written eclaration under section 152 (e) (1) . Ms . Flynn' s signature on the 2000 judgment (and the associated agreements) declared her intent to waive her entitlement to claim an exemption for the son. But 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 the declaration was made in the context of a series of interlocking legal instruments that resolved her divorce proceeding with Mr. Sender. The parties to these legal instruments, including Ms. Flynn, should have known that the 2000 judgment resolving the proceeding could be modified by the court later. ; Consequently, Ms. Flynn's declaration not to claim the exemption for the son was implicitly conditioned on the 2000 judgment remaining in force. Once the 2000 judgment was modified in relevant part by the 2004 judgment, Ms. Flynn's 2000 declaration expired. After 2004 it was no longer itself a declaration within the meaning of section 152(e) (2). It is analogous to a Form 8332 signed by a custodial parent and later revoked by the custodial parent. - yd oner pv T£, %% m'l (9 oc(cid:0)570(re lea sce c4 C\0Àm rec Thus, the 2000 judgment does not qualify as a written \o\ c 'm cer\có cco ms o declaration required by section 152 (e) (2) (A) for the 2008 taxable year . /Ê77/l/L Even if the 2000 judgment did qualify as a 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 c 16 17 18 19 20 written declaration under section 152 (e) (2) (A), it 21 22 23 was not attached to the Petitioners' 2008 tax return. ee sec. 152 (e) (2) (B). Accordingly, we find that the son is not 24 Mr. Sender's qualifying child for the purposes of 25 section 152. Consequently, the Petitioners are not 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company entitled to a section 151 dependency-exemption 11 deduction for him. III. Child Tax Credit A taxpayer is entitled to a child tax credit for "each qualifying child". Sec. 24 (a). A qualifying child for purposes of section 24 is a "qualifying chil A as defined in section 152 (c) who has not attained the age of 17. Sec. 24 (c) (1). 1 2 3 4 5 6 7 8 9 Given that we have determined that the son is not a 10 11 12 13 14 15 "qualifying child" of Mr. Sender for the 2008 taxable year, it follows that the Petitioners are not entitled to a child tax credit for the son. ; IV. Conclusion Given our holding, a decision will be entered for the Respondent. This concludes the 16 Gourt's oral findings of fact and opinion in this 17 18 19 20 21 22 23 24 25 case. I (Whereupon, at 11:15 a.m., the above- entitled matter was concluded.) 866.488.DEPO www.CapitalReportingCompany.com