TAX COURT OPINION

Case: Real F. Canton, I
Docket Number: 23997-13S
Judge: Buch
Opinion Type: bench
Filed: 12/15/2014
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 REAL F. CANTON, I, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 23997-13S. ) ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this order to both petitioner and respondent a copy of the pages of the transcript of the trial in this case that contain the oral findings of fact and opinion that was rendered at the trial session at Washington, D.C. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. December 15, 2014 SERVED DEC 1 6 2014 Capital Reporting Company 3 1 Bench Opinion by Judge Ronald L. Buch 2 October 31, 2014 3 5 6 7 Real F. Canton, I v. Commissioner Docket No. 23997-13S THE CLERK: Docket number 23997-13S, Real F. Canton, I. Please state your appearances. THE COURT: The following represents the 8 Court's oral findings of fact and opinion. The oral 9 findings of fact and opinion may not be relied upon 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 as precedent in any other case. This opinion is in conformity with Section 7459(b) and Rule 152(a). This case was heard pursuant to Section 7463 of the Internal Revenue Code in effect when the Petition was filed. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the years in issue, and all rule references are to the Tax Court Rules of Practice and Procedure. Under Section 7463(b) the decision to be entered in this case is not reviewable by any other court. And this opinion may not be treated as precedent in any other case. The issue in this case is whether Mr. Canton can claim a dependency exemption and a child tax credit for his child for 2011 when he was the non-custodial parent. In order for a non-custodial 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 parent to be entitled to these exemptions and credits, Section 152(e) requires that the custodial parent relinquish their claim. We hold that Mr. Canton is not entitled to the dependency exemption and child tax credit because there was no evidence or a release by the custodial parent. Findings of fact. Mr. Real F. Canton, I has two minor children from a previous relationship 9 with Ms. Leeren Baytop West. Mr. Canton claimed one Lov v3n f-- 10 11 12 of his two sons as a dependent on his 2011 US individual income tax return form 1040. So our discussion will be limited to this child. For the 13 months in 2011 leading up to June 30th Mr. Canton 14 kept his son for less than half of the nights each 15 month. On June 30, 2011 the Circuit Court for Howard 16 17 18 19 20 County, Maryland ordered that Ms. West would have primary physical custody of the child. However, the child was allowed to stay with Mr. Canton, according to the following schedule, every other weekend from Friday evening until Monday morning. Every Wednesday 21 morning until Thursday morning. Alternating holidays 22 23 24 25 and two weeks every summer. Additionally, in a separate order Mr. Canton was ordered to pay Ms. West child support beginning on March 11, 2011. Mr. Canton timely filed his 2011 tax return 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 and claimed the child as his dependent and took a child tax credit for the child. The child's grandmother, Ms. Phyllis Baytop, also claimed the child as a dependent in 2011. On July 18, 2013 the commissioner issued a Notice of Deficiency for tax year 2011 that disallowed the dependency exemption and child tax credit. Mr. Canton timely petitioned to challenge the Commissioner's determination. As a general matter the Commissioner's determinations in the Notice of Deficiency are presumed correct and the taxpayer bears the burden of proving an error, Rule 142(a), Welch v. Eclvcrn, 290 US 111 at 115, 1933. Further, income tax deductions are considered a 14 matter of legislative grace and the taxpayer bears 15 16 17 18 19 20 the burden of proving an entitlement to any claimed deduction or credit, Rule 142(a), Dcpco v. Commissioner, 503 US 79 at 84, 1992. Mr. Canton does not argue that the burden should shift to Respondent under Section 7491(a), and the record does not illustrate the requirements of Section 7491(a) are 21 met. Therefore, Mr. Canton bears the burden of 22 23 24 25 proof. One, dependency exemptions. Section 152(c) allows a taxpayer additional exemption deductions for dependents if the child qualifies as a dependent 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 under Section 152. Section 152(a) provides that a dependent is either a qualifying child or a qualifying relative. Generally among other requirements, qualifying child must share a residence 5 with the person claiming the dependency exemption for 6 more than six months of the taxable year, Section 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 152(c)(1) (b). If a child is not a qualifying child, then the person claiming the dependency exemption on the basis that the child is a qualifying relative instead, generally among other requirements, must show that they provided more than one half of the support for that child for the taxable year. However, Section 152(e) has a special rule for divorced parents, separated parents and parents who live apart to determine which parent is entitled to dependency exemption deduction. Section 152(e) provides that notwithstanding the general requirements for qualifying children and qualifying relatives mentioned above, custodial parent is entitled to the dependency exemption, unless the custodial parent releases a claim to the exemption for that year. Section 152(e) (4) (A) defines the custodial parent as the parent who has custody of the child for the greater portion of the calendar year. In order for the non-custodial parent to claim the 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 exemption the custodial parent must sign a written declaration that the custodial parent will not claim the dependent for that taxable year, and that declaration must be attached to the non-custodial parent' s return, Section 152 (e) (2) . The declaration required under Section 152(e)(2) must be made either on a completed form 8332 or on a statement conforming to the substance of form 8332, Miller v. Commissioner, 114 TC 184 at 189, 2000. Form 8832 is titled Release and Revocation of Release of Claim to Exemption for Child by Custodial Parent and requires the following, the name of the child, the custodial parent's social security number, the signature of the custodial parent and the date the form was signed. In this case Mr. Canton is the non-custodial parent, because he did not have custody of the child for the greater portion of the year at issue. Mr. Canton did not attach-f-e-r 8832 or any other release by the custodial parent to his 2011 return, nor is there any evidence of an unequivocal court order signed by the custodial parent before July 2, 2008 that entitles 22 Mr. Canton to the exemptions. See Section 1.152- 23 24 4(e)(1), income tax regulations. Because there is no evidence or a release by the custodial parent, Ms. 25 West, Mr. Canton is not entitled to claim the 866.488.DEPO twww.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 dependency exemption for 2011. Two, child tax credit. Taxpayers are allowed a credit against income tax for any qualifying child for whom the taxpayer was allowed a deduction under Section 151, the dependency exemption deduction, Section 24(a). A qualifying child is defined by the requirements in Section 152(c) as 8 modified here by Section 152(e), Section 24(c)(1). 9 Because the child is not a qualifying child of Mr. 10 11 12 13 14 15 Canton for 2011, he is not entitled to the child tax credit for 2011. Conclusion. I find that Mr. Canton is not entitled to the dependency exemption deduction and the child tax credit for 2011. And we sustain the Commissioner' s determination in the Notice of 16 Deficiency. An appropriate order .and decision will be forthcoming. (Whereupon, at 1:17 p.m. the above- entitled matter was concluded.) 17 18 19 20 21 22 23 24 25 866.488.DEPO twww.CapitalReportingCompany.com