TAX COURT OPINION

Case: Thomas S. Herceg
Docket Number: 25247-16
Judge: Gale
Opinion Type: bench
Filed: 10/30/2018
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 PA THOMAS S. HERCEG, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ORDER ) ) ) ) ) ) ) ) Docket No. 25247-16. 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 Joseph H. Gale 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 oral findings of fact and opinion, a decision will be entered for respondent. Dated: Washington, D.C. October 30, 2018 (Signed) Joseph H. Gale Judge SERVED Nov 01 2018 Bench Opinion by Judge Joseph H. Gale October 2, 2018 3 Thomas S. Herceg v. Commissioner of Internal Revenue Docket No. 25247-16 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. THE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Hereinafter in this bench opinion, all section references are to the Internal Revenue Code of 1986 in effect for the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner appeared on his own behalf. Joseph E. Nagy appeared on behalf of respondent. Respondent determined a deficiency of $1,987 with respect to petitioner's 2014 Federal income tax. The issues for decision are whether petitioner is entitled to a dependency exemption deduction under section 151(a) and (c) and a child tax credit under section 24(a). 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 (973)406-2250|operationseescrbenet|www.esaibers.net 1 2 3 4 5 6 7 8 9 11 12 13 15 16 17 18 19 20 21 22 23 24 25 Some of 4 the facts have been stipulated, and they are incorporated by this reference. Petitioner resided in Ohio when he filed the petition. Petitioner timely filed his Federal income tax return for 2014. On his return, petitioner claimed dependency exemption deductions and child tax cr:ditorc o er-di+5 for each of his two children from his prior marriage to Paulette Nicholas: JLH, his minor daughter, and JTH, his minor son. No Form 8332, Release of Claim to Exemption for Child e+ Divorced or Separated Parents, or any other of waiver signed by Ms. Nicholas, was attached to the 2014 return. There is no dispute concerning petitioner's entitlement to the claimed dependency exemption deduction and child tax credit with to JTH for 2014. respech Petitioner and Ms. Nicholas divorced and commenced living apart prior to the 2014 taxable year. Petitioner and Ms. Nicholas both signed a Shared Parenting Plan regarding the custody of JLH and JTH, which was adopted as an order by the Wayne County Court of Common Pleas, Juvenile Division, on October 28, 2010. The Plan provided that petitioner should be entitled to claim JTH as a dependent and Ms. Nicholas should be entitled to claim JLH as a dependent for Federal and State income tax purposes for all taxable years commencing with the 2010 taxable year. The Plan also set forth guidelines for when shun (973)406-2250|operationseescrbers.net[wwwascribers.net the children would reside with each parent. Petitioner concedes that JLH resided with Ms. Nicholas for more than 5 one-half of 2014. On August 26, 2016, respondent issued to petitioner a notice of deficiency wherein he disallowed the dependency exemption deduction and child tax credit claimed by petitioner for 2014 with respect to JLH and determined a $1,987 deficiency. Petitioner timely filed a petition for redetermination of the deficiency. The Commissioner's determinations in the notice of deficiency are presumed correct and the taxpayer bears the burden of proving error in the determinations. See Rule 142; Welch v. Helvering, 290 U.S. 111 (1933). Petitioner has not claimed or shown eligibility for a shift in the burden of proof under section 7491(a). He has not in any event introduced credible evidence that, standing alone, would be a sufficient basis for a decision in his favor. See Higbee v. Commissioner, 116 T.C. 438, 442 (2001). Consequently, the burden of proof does not shift to respondent pursuant to section 7491(a). Section 151(a) and (c) allows a taxpayer a deduction for each individual who is a dependent of the taxpayer as defined in section 152. Section 152(a) defines the term "dependent" to mean either a "qualifying child", see sec. 152(a)(1), (c), or a "qualifying 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 (973)406-2250|operationseescribersnet|www.escribersmet relative", ec. 152(a) (2), (d), of the taxpayer. In order to be 44w* taxpayer's qualifying child, an individual must: (A) bear a specified relationship to the taxpayer, including a child thereof; (B) have the same bein3 principal place of abode as the taxpayer for more than one-half of the taxable year; (C) meet certain age requirements; (D) have not provided more than one-half of his or her own support for the year; and, if married, (E)( have not filed a joint return (other than only for a claim of refund) with his or her spouse. Sec. 152(c)(1) (emphasis added). The term "qualifying relative" means an individual: (A) who bears a specified relationship to the taxpayer, including being a child thereof; (B) whose gross income is less than the exemption amount; (C) with respect to whom the taxpayer provides over one-half of the individual's support; and (D) who is not a qualifying child of the taxpayer or of any other taxpayer. Sec. 152(d) (1) (emphasis added). Petitioner conceded that JLH resided with Ms. Nicholas for more than one-half of 2014. Thus, JLH did not have the same principal place of abode as petitioner for more than one-half of 2014 and, for that reason, was not his qualifying child under section 152(c)(1) for 2014. See sec. 152(c)(1) (B). Nor was JLH a qualifying relative of petitioner under section 152(d)(1) for 2014, as JLH was 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 (9733406-2250|operations@escribersnet|wwwascribersaet 7 the qualifying child of Ms. Nicholas for that year, given that JLH was the child of Ms. Nicholas, had the same principal place of abode as Ms. Nicholas for more than one-half of the year, and satisfied the other requirements of section 152(c). See sec. 152(c)(1), (d)(1)(D); see also Seeliger v. Commissioner, T.C. Memo. 2017-175, at *5. Notwithstanding the residence requirement of section 152(c)(1) (B) or the support requirement of section 152(d)(1)(C), section 152(e) provides a special rule for Who arc- parents separated, divorced, or living apart for the last six months of the calendar year under which a child can be treated as the qualifying child or qualifying relative of the "noncustodial parent". Section 152(e) generally awards the dependency exemption deduction to the "custodial parent", es- defined as "the parent having custody [of the child] for the greater portion of the calendar year." Sec. 152(e)(4) (A); see also Maher v. Commissioner, T.C. Memo. 2003-85, slip op. at 10 (stating that the Tax Court has repeatedly looked to where the child resided to determine which parent had physical custody for purposes of section 152(e)(1)); sec. 1.152- 4(d) (1), Income Tax Regs. The "noncustodial parent" is defined as "the parent who is not the custodial parent." Sec. 152(e)(4)(B); see also 1.152-4(d)(1), Income Tax Regs. 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 (973)406-2250|operationseescribers.net|www.escribers.net Section 152(e)(2) provides for an exception to 8 the above general rule, treating the child as the qualifying child or qualifying relative of the noncustodial parent and allowing that parent to claim the dependency exemption deduction for the child if two conditions are met: (1) the custodial parent signs a "written declaration (in such manner and form as ***the Secretary may by regulations prescribe)", stating that he or she will not claim such child as a dependent for the year at issue and (2) the noncustodial parent attached such written declaration to his or her return. The written declaration requirement may be satisfied by attaching Form 8332 to the return. Allred v. Commissioner, T.C. Memo. 2014-54. A written declaration not on a Form 8332 "mash- conform to the substance of that s(cid:16)040 form and must be a document executed for the sole purpose of serving as a written declaration". Sec. 1.152- 4(e)(1)(ii), Income Tax Regs. Additionally, "[a] court order or decree or separation agreement may not serve as a written declaration." Id. Petitioner testified that he claimed a dependency exemption deduction for JLH because he knew that Ms. Nicholas was not filing a 2014 Federal income tax return and would therefore not be claiming a dependency exemption deduction for JLH that year. However, Ms. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 17 18 19 20 21 22 23 24 25 (973)406-2250|operationseescribers.net|www.escribersaet Nicholas never released her claim to the dependency exemption deduction for JLH for 2014 to petitioner, the noncustodial parent. Additionally, petitioner did not 9 attach a Form 8332 or an equivalent written declaration to his 2014 return. During trial petitioner admitted that at the time he filed his 2014 return he was unaware that he was required to attach a Form 8332 or an equivalent written declaration to his return. We have concluded in a number of cases that a noncustodial parent who fails to attach a Form 8332 or its equivalent to his or her return as filed is ineligible to claim the dependency exemption deduction. See Santana v. Commissioner, T.C. Memo. 2012- 49; Espinoza v. Commissioner, T.C. Memo. 2011-108; Chamberlain v. Commissioner, T.C. Memo. 2007-178; Brisset v. Commissioner, T.C. Memo. 2003-310; Presley v. Commissioner, T.C. Memo. 1996-553. The Shared Parenting Agreement, even if it had been attached to petitioner's 2014 return, could not have served as a written declaration under section 152(e)(2) for two reasons: First, it was not a document executed for the sole purpose of serving as a written declaration under section 1.152-4(e)(1)(ii), Income Tax Regs., and second, it explicitly granted Ms. Nicholas the right to claim JLH as a dependent for Federal income tax purposes for all tax years commencing with the 2010 tax year, not 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 (973)406-2250|operationseescribers.net|www.escribers.net petitioner. Thus, 10 JLH may not be treated as petitioner's qualifying child or qualifying relative by virtue of section 152(e). Accordingly, the Court finds that JLH is not petitioner's qualifying child or qualifying relative under section 152(c), (d), or (e), with respect to the 2014 taxable year, and therefore he is not entitled to the dependency exemption deduction for her for such year. A taxpayer may claim a child tax credit for "each qualifying child" for which a taxpayer is allowed a deduction under section 151. Sec. 24(a). A qualifying chi Ick child for purposes of section 24 is a "qualifyin '' as defined in section 152(c) who has not attained the age of 17. Sec. 24(c)(1). Because we have held that JLH is not petitioner's qualifying child within the meaning of section 152(c) with respect to the 2014 taxable year, it follows that petitioner is not entitled to the child tax credit for her for such year. Consequently, decision will be rendered for <9 _pyd respondent. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. 1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 18 19 20 21 22 23 24 25 Cribers (973)406-2250|operations@escrbers.net|www.escribers.net (Whereupon, at 12:55 p.m., the above-entitled 11 matter was concluded.) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (973)406-2250|operations@escribers.net|www.escribers.net