Alves v. Comm'r , 2006 Tax Ct. Summary LEXIS 40 ( 2006 )


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  •                   T.C. Summary Opinion 2006-138
    UNITED STATES TAX COURT
    GARY LYLE GIBSON AND MIRIAN JULIA ALVES, Petitioners v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent
    Docket No. 19638-05S.            Filed September 11, 2006.
    Gary Lyle Gibson, pro se.
    Brian A. Pfeifer, for respondent.
    JACOBS, Judge:   This case was heard pursuant to the
    provisions of section 7463 of the Internal Revenue Code in effect
    at the time the petition was filed.   Unless otherwise indicated,
    subsequent 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.   The decision to be
    entered is not reviewable by any other court, and this opinion
    should not be cited as authority.
    - 2 -
    Respondent determined a $3,468 deficiency in petitioners’
    2003 Federal income tax.    The issues for decision are:   (1)
    Whether petitioners are entitled to dependency exemption
    deductions for petitioner Gary Lyle Gibson’s (Mr. Gibson’s) three
    minor children from a previous marriage; and (2) whether
    petitioners are entitled to a nonrefundable child tax credit and
    a refundable additional child tax credit with respect to each of
    those children.
    Background
    Some of the facts have been stipulated, and they are so
    found.   The stipulation of facts and the attached exhibits are
    incorporated herein by this reference.     At the time of filing the
    petition, petitioners resided in Margate, Florida.
    Mr. Gibson has three children from a former marriage.       That
    marriage was dissolved by a judgment of the Circuit Court of the
    Eleventh Judicial Circuit of Florida in and for Miami-Dade County
    on April 11, 2003.    As part of its judgment, the Florida circuit
    court:   (1) Ordered shared parental responsibility for the three
    children; and (2) ordered Mr. Gibson to pay child support of
    $420.94 biweekly.    Additionally, the court designated Mr.
    Gibson’s former wife the custodial parent.1   The judgment of the
    Florida circuit court did not award either parent the right to
    1
    Mr. Gibson’s former wife was named the “primary residential
    parent”, and Mr. Gibson was named the “secondary residential
    parent.”
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    claim dependency exemption deductions for the children for
    Federal income tax purposes.   The children resided with their
    mother for the greater portion of 2003, the tax year in issue.
    Petitioners timely filed a joint Form 1040, U.S. Individual
    Income Tax Return, for tax year 2003.    They claimed dependency
    exemption deductions for the three children in the custody of Mr.
    Gibson’s former spouse, as well as child tax credits and
    additional child tax credits for those children.2    Petitioners did
    not attach to their return a Form 8332, Release of Claim to
    Exemption for Child of Divorced or Separated Parents, or other
    written declaration by Mr. Gibson’s former spouse.
    Respondent determined that petitioners are not eligible for
    the dependency exemption deductions claimed for the minor
    children in the custody of Mr. Gibson’s former spouse, or for the
    child tax credits or the additional child tax credits claimed for
    those children.   Accordingly, respondent determined a $3,468
    deficiency in tax for petitioners’ 2003 tax year and sent
    petitioners a notice of deficiency.     Petitioners timely
    petitioned this Court, alleging that they provided more than 50
    percent of the children’s support during 2003 and are therefore
    entitled to the claimed dependency exemption deductions, child
    tax credits, and additional child tax credits.
    2
    Petitioners also claimed a dependency exemption deduction
    with respect to a fourth child. Respondent does not challenge
    the validity of that claim.
    - 4 -
    Discussion
    As a general rule, the Commissioner’s determinations in the
    notice of deficiency are presumed correct, and the burden of
    proving an error is on the taxpayer.     Rule 142(a); Welch v.
    Helvering, 
    290 U.S. 111
    , 115 (1933).
    Custody is determined by the most recent divorce or custody
    decree.   Sec. 1.152-4(b), Income Tax Regs.   A noncustodial parent
    may be entitled to a dependency exemption deduction under section
    151 if the noncustodial parent attaches to his or her tax return
    a Form 8332 or similar written declaration, signed by the
    custodial parent, stating that the custodial parent will not
    claim the child as a dependent for the calendar year.    Sec.
    152(e)(2); Miller v. Commissioner, 
    114 T.C. 184
    (2000).
    The Florida circuit court’s judgment granted primary
    physical custody to Mr. Gibson’s former wife.    Petitioners, as
    noncustodial parents, did not attach to their 2003 return a Form
    8332 or similar written declaration by Mr. Gibson’s former wife
    that she would not claim the children as dependents.
    At trial, petitioners submitted a document entitled
    “Establishment of Fact” in which they cited the provisions of
    sections 151 and 152 but argued that these statutory provisions
    are unconstitutional because biological fathers involved in
    divorce typically do not obtain custody of their children when
    the marriage ends and yet typically contribute more than 50
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    percent of their children’s support.3     Petitioners’ argument is
    flawed.
    Before 1985, the custodial parent generally was treated as
    having provided more than half of the support for each minor
    child and was entitled to the dependency exemption deduction.
    The noncustodial parent, however, was entitled to the dependency
    exemption deduction if he or she provided $1,200 or more for the
    support of the child and the custodial parent did not “clearly
    establish” by a preponderance of the evidence that he or she
    provided more than the noncustodial parent.     See sec. 152(e)
    before amendment by the Deficit Reduction Act of 1984, Pub. L.
    98-369, sec. 423(a), 98 Stat. 799.      This put the Internal Revenue
    Service in the middle of conflicts between parents that were
    “often subjective and [presented] difficult problems of proof and
    substantiation.”   H. Rept. 98-432 (Part 2), at 1498 (1984).
    Congress amended section 152(e) and gave the dependency
    exemption deduction to the custodial parent unless that parent
    waives the right to claim it.
    Id. at 1499.
        Absent such a
    waiver, under section 152(e)(1), in the case of a minor dependent
    whose parents are divorced or separated and together provide over
    half of the support for the minor dependent, the parent having
    custody for the greater portion of the calendar year will
    3
    At trial, petitioners did not submit any evidence to
    support their claim that they contributed more than 50 percent of
    the children’s support.
    - 6 -
    generally be treated as providing over half of the support of the
    minor dependent, and that parent will be entitled to the
    dependency exemption deduction.
    It is well settled that deductions are a matter of
    legislative grace, and taxpayers must satisfy the specific
    statutory requirements for claimed deductions.   INDOPCO, Inc. v.
    Commissioner, 
    503 U.S. 79
    , 84 (1992); New Colonial Ice Co. v.
    Helvering, 
    292 U.S. 435
    , 440 (1934).   This Court has in the past
    rejected claims that the provisions of section 152 are
    unconstitutional.   Caputi v. Commissioner, T.C. Memo. 2004-283.
    Accordingly, we hold that for tax year 2003 petitioners are not
    entitled to dependency exemption deductions for the three
    children from Mr. Gibson’s previous marriage.
    Petitioners claimed child tax credits and additional child
    tax credits for the three children who were claimed as
    dependents.   Section 24(a) authorizes a child tax credit with
    respect to each qualifying child of the taxpayer.
    The term “qualifying child” is defined in section 24(c).    A
    “qualifying child” means an individual with respect to whom the
    taxpayer is allowed a deduction under section 151, who has not
    attained the age of 17 as of the close of the taxable year, and
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    who bears a relationship to the taxpayer as prescribed by section
    32(c)(3)(B).   Sec. 24(c)(1).
    The child tax credit is a nonrefundable personal credit that
    was added to the Internal Revenue Code by the Taxpayer Relief Act
    of 1997, Pub. L. 105-34, sec. 101(a), 111 Stat. 796, with a
    provision for a refundable credit, the additional child tax
    credit, for families with three or more children.    For tax years
    beginning after December 31, 2000, the additional child tax
    credit provision was amended to remove the restriction that only
    families with three or more children are entitled to claim the
    credit.   See sec. 24(d)(1); Economic Growth and Tax Relief
    Reconciliation Act of 2001, Pub. L. 107-16, sec. 201(c)(1), 115
    Stat. 46.
    In the absence of other nonrefundable personal credits, a
    taxpayer is allowed to claim a child tax credit in an amount that
    is the lesser of the full child tax credit or the taxpayer’s
    Federal income tax liability for the taxable year.   See sec.
    26(a).
    If the child tax credit exceeds the taxpayer’s Federal
    income tax liability for the taxable year, a portion of the child
    tax credit may be refundable as an additional child tax credit
    under section 24(d)(1).   For 2003, the additional child tax
    credit is allowed in an amount that is the lesser of the
    remaining child tax credit available or 10 percent of the amount
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    by which the taxpayer’s earned income exceeds $10,500.     Sec.
    24(d)(1)(A) and (B), (3); Rev. Proc. 2002-70, sec. 3.04, 2002-2
    C.B. 845, 847.   The refundable and nonrefundable portions of the
    child tax credit cannot exceed the total allowable amount of the
    credit.
    Since petitioners are not allowed dependency exemption
    deductions with respect to the children from Mr. Gibson’s former
    marriage, they are not qualifying children.   Therefore,
    petitioners are not entitled to claim child tax credits with
    respect to those children.   Moreover, petitioners are not
    entitled to claim additional child tax credits because they did
    not qualify for child tax credits.
    To reflect the foregoing,
    Decision will be entered
    for respondent.
    

Document Info

Docket Number: No. 19638-05S

Citation Numbers: 2006 T.C. Summary Opinion 138, 2006 Tax Ct. Summary LEXIS 40

Judges: \"Jacobs, Julian I.\"

Filed Date: 9/11/2006

Precedential Status: Non-Precedential

Modified Date: 11/20/2020