                    T.C. Summary Opinion 2005-188



                       UNITED STATES TAX COURT



         STEVEN F. DARTON AND PAULA V. JACOBS, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6618-04S.              Filed December 27, 2005.



     Steven F. Darton and Paula V. Jacobs, pro se.

     Marion K. Mortensen, for respondent.




     COUVILLION, Special Trial Judge:    This case was heard

pursuant to section 7463 in effect when the petition was filed.1

The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.


     1
      Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year at issue.
The Court decides this case without regard to the burden of proof
under sec. 7491.
                               - 2 -

     Respondent determined a deficiency of $1,909 in petitioners’

Federal income tax for the year 2002.   The sole issue for

decision is whether petitioners are entitled to the section 151

dependency exemption for one child for the taxable year 2002.

     Some of the facts were stipulated.   Those facts, with the

exhibits annexed thereto, are so found and made part hereof.

Petitioners’ legal residence at the time the petition was filed

was Sandy, Utah.

     Petitioner husband (petitioner) and Jacqueline Cornea (Ms.

Cornea) were formerly married to each other and were divorced in

December 1998.   Five children were born of that marriage between

1980 and 1988.   Petitioner thereafter married Paula Jacobs

(petitioner wife).   They filed a joint Federal income tax return

for 2002.

     On their joint Federal income tax return for 2002,

petitioners claimed two of the five children as dependents, C.D.

and S.D.2   In the notice of deficiency, respondent disallowed the

dependency exemption deduction claimed by petitioners for S.D.

The basis for the disallowance was respondent’s determination

that Ms. Cornea was the custodial parent for S.D. during 2002,

and thus she, not petitioner, was entitled to the dependency

exemption for the year in question.




     2
      The Court refers to the minor children by their initials.
                               - 3 -

     Petitioner and Ms. Cornea entered into a Decree of Divorce

(Decree) in the District Court of the Third Judicial District for

Salt Lake County, Utah, on December 8, 1998.    In the Decree,

petitioner and Ms. Cornea agreed that petitioner would be awarded

custody3 of two of the children, including C.D., and Ms. Cornea

would be awarded custody of two other children, including S.D.     A

fifth child was no longer a minor at the time of the divorce.

The Decree included several pages outlining the exact dates each

child would spend with both petitioner and Ms. Cornea, resulting

in an almost equal share of physical custody.

     With respect to dependency exemptions for tax purposes, the

parties agreed that each was entitled to the dependency

exemptions for the children they received custody of; however,

the Decree further provided that petitioner could “purchase” a

dependency exemption for either of the children in Ms. Cornea’s

custody for a specific tax year, if needed.    To do so, petitioner

was required to pay Ms. Cornea “the difference in her income tax

obligations when taking the exemptions and when not taking the

exemptions”.   Petitioner testified that he paid Ms. Cornea $500

in 2002 for the dependency exemption for S.D.

     Section 151(c) allows a taxpayer to deduct an annual

exemption amount for each dependent, as defined in section 152.



     3
      Although petitioner had legal custody of C.D., petitioner
and Ms. Cornea equally shared his physical custody.
                                - 4 -

Under section 152(a), the term “dependent” means, in pertinent

part, a son or daughter of the taxpayer over half of whose

support was received from the taxpayer.    Sec. 152(a)(1).   There

is no dispute that S.D. is a dependent as defined in section 152.

     In the case of a child of divorced parents, section

152(e)(1) provides in pertinent part that the dependency

exemption is allowed to the “custodial parent”.    Section 1.152-

4(b), Income Tax Regs., provides generally that the custodial

parent is determined by the most recent decree of divorce in

effect between the parties.    In this case, there is also no

dispute that the divorce decree designated Ms. Cornea as the

custodial parent of S.D.; therefore, Ms. Cornea is generally

entitled to the dependency exemption for S.D.

     Although the custodial spouse is generally entitled to the

dependency exemption, the “noncustodial parent” is allowed the

dependency exemption if one of the three statutory exceptions in

section 152(e) is satisfied.    If an exception applies, the

“noncustodial parent” (in this case, petitioner) is treated as

providing over half of that child’s support.    As relevant here,

section 152(e)(2) provides that, if “the custodial parent signs a

written declaration”, such custodial parent will not claim such

child as a dependent, and the noncustodial parent attaches such

written declaration to the noncustodial parent’s return for the
                                - 5 -

taxable year, then the noncustodial parent is entitled to the

dependency exemption deduction for that year.

     The “written declaration” is embodied in Form 8332, Release

of Claim to Exemption for Child of Divorced or Separated Parents.

That form consists of two parts, Part I, which is for release of

the dependency exemption for the “current year”, and Part II

applies to releases for “future years”.    Both parts (if

applicable) must be signed by the custodial parent releasing the

exemptions, and each part requires the year or years (in the case

of Part II) to which the exemption is released and the names of

the dependents.

     In this case, petitioner did not attach a copy of a

completed Form 8332 to his 2002 Federal income tax return;

however, he did present one to respondent on the morning of the

trial, purportedly signed by Ms. Cornea.    Respondent, however,

ascertained prior to trial that Ms. Cornea had already claimed a

dependency exemption for S.D. on her 2002 Federal income tax

return; therefore, she could not release the dependency exemption

to petitioner.    Sec. 152(e)(2)(A)(ii).

     Petitioner contends that S.D. spent equal time living with

him, and he did in fact provide the child with over one-half of

the child’s support during 2002.    Although petitioner and Ms.

Cornea did go to great lengths to ensure S.D. would spend almost

equal parts of the year with each of them, the divorce decree
                               - 6 -

lists Ms. Cornea as the custodial parent of S.D. and states that

Ms. Cornea is entitled to the dependency exemption on her Federal

income tax return for S.D.   Neither the Internal Revenue Code nor

this Court recognizes a taxpayer’s ability to “purchase” a

dependency exemption from the custodial parent.   Furthermore,

even if such an arrangement would be sanctioned, Ms. Cornea

claimed the exemption on her return and was thus not able to

release the exemption to petitioner.   Respondent, therefore, is

sustained.   Petitioner is not entitled to the dependency

exemption for S.D. claimed on his 2002 Federal income tax return.

     Reviewed and adopted as the report of the Small Tax Case

Division.



                                         Decision will be entered

                                    for respondent.
