Keene v. Comm'r , 2007 Tax Ct. Summary LEXIS 190 ( 2007 )

T.C. Summary Opinion 2007-186
UNITED STATES TAX COURT
RICHARD G. KEENE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No 7849-06S. Filed November 1, 2007.
Richard G. Keene, pro se.
Mark Miller and Jennifer Viken, for respondent.
GOLDBERG, Special Trial 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. Pursuant to section
7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be treated as precedent
for any other case. Unless otherwise indicated, subsequent
section references are to the Internal Revenue Code in effect for
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the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
Respondent determined a deficiency in petitioner’s 2004
Federal income tax of $3,550. The issues for decision are
whether petitioner is entitled to claim dependency exemptions for
two minor children for taxable year 2004, and whether petitioner
is also entitled to claim child tax credits with respect to those
children for the year in issue.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and attached exhibits are incorporated
herein by this reference. At the time the petition was filed,
petitioner resided in Tomah, Wisconsin.
Petitioner and Lynn W. Keene (Dr. Keene) were previously
married. Three children were born of the marriage: A.K., B.K.,
and M.K.1 A Judgment of Divorce (Judgment) was entered in the
Circuit Court, Family Court Branch, Monroe County, Wisconsin, on
February 8, 2001. The Judgment incorporated a Marital Settlement
Agreement previously entered in the circuit court on February 1,
2001.
The Marital Settlement Agreement provided that Dr. Keene
would have primary physical custody for all three children, with
petitioner having biweekly visitation consisting of 3-day
1
The Court uses initials when referring to minor children.
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weekends. The parties agree that Dr. Keene was the custodial
parent of the minor children at issue during the taxable year
2004. Pursuant to the Marital Settlement Agreement, the Judgment
ordered that petitioner pay 29 percent of his income to Dr. Keene
as child support.
With respect to the issue of which parent would claim the
child dependency exemptions, the Judgment, in pertinent part,
provides as follows:
SECTION VII. TAXES.
A. The petitioner, Richard Keene * * * shall have the
right to claim the child A.K. * * * as a dependent for
federal and state income tax purposes provided that one or
both parents fulfill the tax code requirements for claiming
a dependency exemption. Petitioner’s right to claim the
child as a dependent is dependent upon him being current and
in compliance with the support provisions of this agreement.
* * * * * * *
The petitioner shall alternate the right to claim
M.K. as a dependent for federal and state income tax
purposes provided that one or both parents fulfill the tax
code requirements for claiming the dependency exemption.
Petitioner shall claim M.K. in even numbered years.
Petitioner paid $14,891.25 in child support to Dr. Keene in
2004. This total comports with the amount that petitioner was
ordered to pay (29 percent of income) in the underlying Judgment.
Petitioner timely filed his 2004 Federal income tax return
claiming dependency exemptions with respect to the minor
children, A.K. and M.K., and two child tax credits. Petitioner
attached to his 2004 Federal income tax return a Form 8332,
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Release of Claim to Exemption for Child of Divorced or Separated
Parents (Form 8332), which was not signed by Dr. Keene, the
custodial parent. In the notice of deficiency, respondent
explained that he was disallowing petitioner’s claimed dependency
exemptions for A.K. and M.K. on the grounds that another taxpayer
had also claimed the dependency exemptions for them for the 2004
taxable year. Accordingly, respondent disallowed petitioner’s
claimed exemptions and correspondingly disallowed petitioner’s
claimed child tax credits.
Prior to the filing of his 2004 return, petitioner attempted
to have Dr. Keene sign the Form 8332 for taxable year 2004.
Petitioner sent a copy of Form 8332 to Dr. Keene, asking her to
complete and sign it. She allegedly refused to do so. Problems
arose between petitioner and Dr. Keene regarding the
interpretation of some of the terms of the Marital Settlement
Agreement. Petitioner then filed a Motion for Remedial Contempt
in the circuit court to enforce, among the other provisions in
the Marital Settlement Agreement, his entitlement to claim the
dependency exemptions with respect to A.K. and M.K., in those
years in which petitioner was entitled to claim the exemptions.
By oral decision dated July 22, 2003, which is reflected in the
proceeding’s transcript, the circuit court held that petitioner
was in compliance with his child support obligations as provided
under the Judgment, and that he should be entitled to claim the
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dependency exemption for A.K. for the taxable years in question.
Petitioner believed that because the circuit court made this
ruling with respect to his entitlement to claim the exemption for
A.K. in 2003, he accordingly should be entitled to claim both
exemptions for taxable year 2004.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct. Welch v. Helvering,
290 U.S. 111, 115 (1933). In pertinent part, Rule 142(a)(1)
provides the general rule that the burden of proof shall be upon
the taxpayer. In certain circumstances, however, if the taxpayer
introduces credible evidence with respect to any factual issue
relevant to ascertaining the proper tax liability, section 7491
shifts the burden of proof to the Commissioner. Sec. 7491(a)(1);
Rule 142(a)(2). Petitioner did not argue that section 7491 is
applicable in this case, nor did he establish that the burden of
proof should shift to the respondent. Petitioner, therefore,
bears the burden of proving that respondent’s determination in
the notice of deficiency is erroneous. See Rule 142(a); Welch v.
Helvering, supra at 115.
Section 151 allows deductions for personal exemptions,
including exemptions for dependents of the taxpayers. See sec.
151(c). Section 152(a) defines the term “dependent”, in
pertinent part, to include a son or daughter of the taxpayer over
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half of whose support for the calendar year was received from the
taxpayer. Section 152(e) carves out a special exception to the
aforementioned in the case of parents who are divorced or
separated. Simply put, section 152(e) provides that the parent
having legal custody of the child (a.k.a. the custodial parent)
at issue is entitled to claim the dependency exemption deduction
for that child unless the custodial parent has validly executed a
written release of his or her right to claim the deduction as the
custodial parent of record. Sec. 152(e)(1) and (2).
The parties agree, and the record is clear, that petitioner
was not the custodial parent of either A.K. or M.K. during the
year in issue. Accordingly, our only inquiry is whether Dr.
Keene validly executed a release of her right to claim the
deduction as the custodial parent of record.
Petitioner argues his entitlement to the dependency
exemption deductions because the aforementioned Judgment affords
him the right to claim A.K. as a dependent so long as he is
current in his child support and health insurance obligations,
and gives him the right to claim M.K. in even years, again, so
long as he is current in his child support and health insurance
obligations. The record is silent as to any evidence contrary to
the fact that, during the year in issue, petitioner was compliant
with these obligations; however, although the Judgment and the
oral decision of the circuit court provide that petitioner is
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entitled to claim dependency exemptions in 2004 for A.K. and
M.K., is it well settled that State courts, by their decisions,
cannot determine issues of Federal tax law. See Commissioner v.
Tower, 327 U.S. 280 (1946); Miller v. Commissioner, 114 T.C. 184
(2000).
It therefore follows that, irrespective of what is contained
in the Judgment as to petitioner’s right to claim dependency
exemptions for A.K. and M.K., the law is clear that a taxpayer is
entitled to a dependency exemption in the taxable year if, and
only if, he or she is in compliance with section 152. Petitioner
argues that he was in compliance with section 152 because
although he could not get Dr. Keene to relinquish her entitlement
to claim the deductions by signing the Form 8332, the Judgment
affords him an unequivocal right to claim the deductions.
Irrespective of whether or not a Form 8332 is signed, he argues,
Dr. Keene signed the Judgment and, in doing so, unequivocally
agreed to relinquish her right to claim the exemption at that
time.
When a custodial parent releases his or her right to claim a
dependency exemption for more than 1 year, the noncustodial
parent must attach the original release of claim to his tax
return for the immediate year and attach a copy of the release of
claim to each succeeding return on which he claims the dependency
exemptions. Chamberlain v. Commissioner, T.C. Memo. 2007-178.
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Failure to attach a valid Form 8332, or an equivalent written
declaration, disqualifies a noncustodial taxpayer from claiming a
dependency exemption for his minor child. Miller v.
Commissioner, supra at 188-189.
Section 152(e) is clear; it grants the dependency exemption
to a noncustodial parent only when he attaches a valid Form 8332
or its equivalent to a Federal income tax return for the taxable
year in which he or she claims the exemption. Form 8332 requires
a taxpayer to agree not to claim a dependency exemption and to
furnish: (1) The name of the child for whom exemption claims are
released; (2) the years for which the claims are released; (3)
the signature of the custodial parent; (4) the Social Security
number of the custodial parent; (5) the date of the custodial
parent’s signature; and (6) the name and the Social Security
number of the parent claiming the exemption. Miller v.
Commissioner, supra at 190.
The parties agree that while petitioner did not attach a
signed Form 8332 to his Federal income tax return for 2004, he
did attach a copy of the sections of the Marital Settlement
Agreement pertaining to that parent who is entitled to claim the
exemptions as well as the signature page. Petitioner argues that
the combination of the custodial parent’s signature on the
Marital Settlement Agreement and the circuit court’s oral
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decision should qualify as an equivalent to Form 8332, thus
entitling him to the claimed dependency exemptions.
To properly release a claim to a dependency exemption
deduction, section 152(e) requires a custodial parent to sign a
written declaration that contains an express and unqualified
statement that the custodial parent will not claim the dependency
exemption for that year. Bramante v. Commissioner, T.C. Memo.
2002-228. In this case, the Judgment specifies that petitioner
would be entitled to claim the dependency exemptions for A.K.
only if he were in good standing with his child support
obligations, and for M.K. only in even years where he was also in
good standing with his support obligations.
The Marital Settlement Agreement, signed in assent by the
custodial parent, Dr. Keene, granted petitioner the right to
claim the deductions if, and only if, he were compliant with his
support obligations. Dr. Keene’s signature on the Marital
Settlement Agreement, however, does not necessarily comport that
document with an unequivocal statement of relinquishment. In
Boltinghouse v. Commissioner, T.C. Memo. 2003-134, the taxpayers
also attached to their return a copy of a divorce agreement,
which was signed by both the custodial and noncustodial parent.
The agreement in that case, however, unconditionally granted the
noncustodial parent the dependency exemption. The Court held
that the divorce agreement in Boltinghouse v. Commissioner,
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supra, met all of the requirements of a written declaration under
section 152(e)(2) because it conformed in substance to Form 8332.
Unlike the divorce agreement in Boltinghouse v.
Commissioner, supra, the Judgment at issue is conditional; that
is, petitioner is entitled to claim the exemptions for A.K. and
M.K. only if he is current in his child support obligations and,
with respect to M.K. only, it is an even year. This condition
creates the question of whether or not petitioner would be
entitled to claim the dependency exemptions depending upon his
compliance with his support obligations. This condition suggests
that petitioner’s compliance with his support obligations may
change from year to year, such that petitioner’s entitlement to
the dependency exemption for A.K. and M.K. (in even years) is
subject to change each year. As such, the order does not conform
in substance to Form 8332 because it fails to state with
specificity the applicable tax year or years for which petitioner
is entitled to claim the exemptions. Therefore, we find that the
Judgment does not constitute a written declaration under section
152(e)(2).
With respect to the child tax credits petitioner claimed for
A.K. and M.K. for taxable year 2004, 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
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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 who bears a relationship to the taxpayer as prescribed
by section 32(c)(3)(B). Sec. 24(c)(1).
Since petitioner was not allowed a deduction with respect to
either A.K. or M.K. under sections 151 and 152, it follows that,
for the year in issue, neither A.K. nor M.K. is a qualifying
child. Consequently, irrespective of language in the Judgment to
the contrary, petitioner is not entitled to claim a child tax
credit for either A.K. or M.K. in 2004.
Finally, petitioner asks us to disregard the foregoing legal
analysis and respondent’s determination, in the light of facts
that show his ex-wife’s failure to comply with the provisions of
the Judgment. While there is no doubt in our mind that Dr. Keene
failed to sign the Form 8332 when requested to do so, and that
petitioner was in compliance with the terms of the Judgment for
taxable year 2004 (thus entitling him to enforce those provisions
of the Marital Settlement Agreement with respect to the
entitlement for the dependency exemption) the Tax Court is not a
court of equity, and we cannot intervene in matters beyond our
jurisdiction. Scarangella v. Commissioner, T.C. Memo. 1969-13,
affd. per curiam 418 F.2d 228 (3d Cir. 1969). Accordingly,
respondent’s determination in this matter is sustained.
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Decision will be entered
for respondent.