TAX COURT OPINION

Case: Tommy James Rayford
Docket Number: 9096-12
Judge: Kerrigan
Opinion Type: bench
Filed: 07/01/2013
Pages: 9

CMS UNITED STATES TAX COURT WASHINGTON, DC 20217 TOMMY JAMES RAYFORD, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. ) ) ) ) ) 9096-12. O R D E R 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 Kathleen Kerrigan at Chicago, Illinois on June 6, 2013, containing her oral findings of fact and opinion rendered at the conclusion of the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Kathleen Kerrigan Judge Dated. Washington, D.C. July 1, 2013 SERVED Jul 02 2013 Capital Reporting Company 3 Bench Opinion by Judge Kathleen Kerrigan June 6, 2013 Tommy James Rayford v. Commissioner Docket No. 9096-12 The Court has decided to render oral findings of fact and opinion in this case. 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 and Rule 152 of the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Respondent determined a deficiency of $3,247 in petitioner's Federal income tax for tax year 2009. The issues for our consideration are (1) whether petitioner is entitled to a dependency exemption deduction under section 151(c) and (2) whether petitioner is entitled to a child tax credit under section 24. 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.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 Trial of this case was conducted on June 3, 2013, in Chicago, Illinois. We find the following facts. Findings of Fact The parties' stipulation of facts with exhibits 1J and 2J and 3P and 4P is admitted to evidence and is incorporated herein. Petitioner resided in Illinois when he filed the petition. Petitioner has one minor child, 10 N.J.R., whose name we redact pursuant to Rule 11 12 13 14 15 16 17 27(a) (3). N.J.R. was born in 1998. Petitioner has never been married to the mother of N.J.R. On June 4, 2001, petitioner received an order from the Circuit Court of the Sixteenth Judicial Circuit, Kane County, Illinois (June 2001 court order). The June 2001 court order states that petitioner is entitled to claim an exemption for 18 N.J.R. for State and Federal tax purposes in 19 20 21 22 23 24 alternate years, beginning with calendar year 2001. The June 2001 court order further states that petitioner may not claim an exemption "for any year in which child support arrearage existed for more than 30 days". In the tax year in issue, N.J.R. lived 25 with his mother for more than half of the year, and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 petitioner was not in arrears with respect to his child support payments. On petitioner's Form 1040, U.S. Individual Income Tax Return, for tax year 2009, he claimed a dependency exemption deduction for N.J.R. and a child tax credit. The mother of N.J.R. did not sign a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, for tax year 2009. Petitioner did not affix the June 2001 court order to his 2009 Federal income tax return. Petitioner did not affix any written declaration to his 2009 Federal income tax return 13 with respect to the dependency exemption deduction or 14 15 16 17 child tax credit. In the notice of deficiency, respondent disallowed petitioner's claimed dependency exemption deduction and child tax credit for N.J.R. 18 Petitioner timely petitioned this Court for 19 20 21 22 23 24 redetermination. Opinion Generally, the Commissioner's determinations in a notice of deficiency are presumed correct, and a taxpayer bears the burden of proving those determinations are incorrect. Rule 142(a); 25 Welch v. Helvering, 290 U.S. 111, 115 (1933). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 Petitioner does not contend that the burden of proof 6 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 should be shifted to respondent under section 7491(a), and the record does not suggest any basis for a shift. I. Dependency Exemption Deduction Section 151(c) provides that an individual is entitled to an exemption deduction for his or her dependents. A child of a taxpayer generally qualifies as a dependent if the child shares the same principal place or abode as the taxpayer for more than one-half of the tax year in issue. See sec. 152(a), (c). Section 152 (e) (1), however, provides a special rule where the child's parents are divorced or legally separated, or where the parents lived apart during the last six months of the calendar year at issue. We note that section 152(e) (1) applies to parents who were never married, so long as the parents lived apart during the last six months of the calendar year at issue. King v. Commissioner, 121 T.C. 245, 250 (2003); see also sec. 1.152-4 (b) (2) (i) (C), Income Tax Regs. Section 152(e) generally allows the parent having custody of the child for the greater portion of the calendar year (custodial parent) to claim the dependency exemption deduction. As an 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 exception to the general rule, a noncustodial parent may claim the exemption where (1) the custodial parent executes a valid written declaration releasing his or her claim to the exemption and (2) the noncustodial parent attaches that declaration to his or her Federal income tax return for the taxable year. Sec. 152(e) (2); sec. 1.152-4 (e), Income Tax Regs. In this case, petitioner and the 10 mother of N.J.R. were never married, and they lived 11 12 13 14 apart for the last six months of tax year 2009. Therefore, the special rule in section 152(e) applies. N.J.R. resided with his mother for 15 more than half of 2009, so the mother of N.J.R. was 16 17 18 19 20 21 22 23 24 25 the custodial parent and petitioner was the noncustodial parent. See sec. 152(e) (4). As the custodial parent, the mother of N.J.R. was entitled to claim a dependency exemption deduction for N.J.R., unless she executed a valid written declaration releasing her claim to the dependency exemption deduction, and petitioner affixed the valid written declaration to his 2009 Federal income tax return. The written declaration required by section 152(e) (2) must be made on either a Form 8332 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 or on a statement conforming to the substance of Form 8332. See Miller v. Commissioner, 114 T.C. 184, 190- 191 (2000). The mother of N.J.R. did not sign a Form 8332 for tax year 2009 or provide a statement conforming to the substance of Form 8332. Petitioner did not affix a written declaration to his 2009 Federal income tax return. Therefore, petitioner is not entitled to claim a dependency exemption deduction with respect to N.J.R. for tax year 2009. Petitioner testified that his accountant told him to attach the June 2001 court order to his 2009 Federal income tax return. However, the order was not filed with the return. Even if petitioner had attached the June 2001 court order to his 2009 Federal income tax return, he would not have been entitled to claim a dependency exemption deduction with respect to N.J.R. because the June 2001 court order does not conform to the substance of Form 8332. A basic element necessary for satisfying section 152 (e) (2) (A) is a custodial parent's declaration that he or she "will not claim" the child as a dependent for a taxable year. A custodial parent accomplishes this on a Form 8332 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 with the following statement: "I agree not to claim 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 * * * for the tax year". This statement is unconditional. In order for a document to comply 3 with the substance of Form 8332, and ultimately 4 section 152(e) (2) (A), the declaration on the document 5 must also be unconditional. Armstrong v. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Commissioner, 139 T.C. , (December 19, 2012). In this case, the June 2001 court order was conditional. The June 2001 court order states that petitioner is entitled to the exemption every other year on the condition that his child support payments are not in arrears for more than 30 days that year. As such, we find that the June 2001 court order is not a statement conforming to the substance of Form 8332. II. Child Tax Credit Section 24 (a) authorizes a taxpayer to claim a child tax credit with respect to each qualifying child of the taxpayer. The term "qualifying child" for these purposes means a qualifying child as defined in section 152(c) who has not attained age 17. Sec. 24 (c) (1). Because petitioner did not establish that N.J.R. qualified as a dependent under section 152(c) or the exception in section 152(e) (2), he has not satisfied the "qualifying child" requirement for the child tax 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company credit under section 24. Therefore, petitioner is not entitled to claim a child tax credit with respect to N.J.R. 10 for tax year 2009. III. Conclusion In sum, we find that petitioner is not entitled to a dependency exemption deduction or a child tax credit for N.J.R. for tax year 2009. We sustain the deficiency as determined by respondent. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 9:31 a.m., the above- entitled matter was concluded.) 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.CapitalReportingCompany.com