                   T.C. Summary Opinion 2008-72



                      UNITED STATES TAX COURT



                  GAETANO P. DRAGO, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10573-07S.              Filed June 23, 2008.


     Robert J. Scott, for petitioner.

     Gary J. Merken, 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.    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 the year in issue,
                                - 2 -

and all Rule references are to the Tax Court Rules of Practice

and Procedure.

       Respondent determined a $3,118 deficiency in petitioner’s

2005 Federal income tax.    The issues for decision are:   (1)

Whether petitioner is entitled to dependency exemption deductions

for his two minor children; (2) whether petitioner is entitled to

a nonrefundable child tax credit and a refundable additional

child tax credit with respect to each of his children; and (3)

whether petitioner is entitled to head of household filing

status.

                             Background

       This case was submitted fully stipulated pursuant to Rule

122.    The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    Petitioner resided in New

Jersey at the time he filed his petition.

       Petitioner has two children from a marriage which was

dissolved by a judgment of the Superior Court of New Jersey,

Chancery Division, on January 24, 1994 (the divorce decree).      As

part of the divorce decree, the New Jersey superior court:       (1)

Granted joint legal custody of the two children to petitioner and

his former spouse and ordered that the children were to reside
                               - 3 -

with petitioner’s former spouse;1 and (2) ordered petitioner to

pay child support.   The divorce decree further provided:

     c.   PERSONAL EXEMPTIONS FOR CHILDREN OF THE MARRIAGE.

          Defendant [petitioner’s former spouse] agrees to sign
     an IRS form 8332 at the same time that she signs this
     Agreement, waiving the right as primary residential
     custodial parent of the children to claim them as her
     personal exemptions for federal and state income tax
     purposes, which waiver shall be for 1993 and for each tax
     year thereafter for so long as Plaintiff [petitioner] may be
     entitled to claim the children as his personal exemptions
     under the Internal Revenue Code * * *

     The parties stipulated that from 1994 through 2005:    (1)

Petitioner “was always current with his support payments for his

children and that such payments amounted to 59 percent of their

support”; and (2) petitioner’s former spouse “contributed the

remaining 41 percent of support for [the children].”

     Petitioner timely filed a Form 1040, U.S. Individual Income

Tax Return, for 2005 on which he reported his filing status as

head of household.   Petitioner’s return was prepared with the

assistance of a professional tax return preparer.   Petitioner

claimed dependency exemption deductions for his two children as

well as child tax credits and an additional child tax credit for

those children.




     1
      Petitioner’s former spouse was designated the “residential
parent” and as such was responsible “for the day-to-day decision-
making on behalf of the children.” All major parenting decisions
were to be jointly made and “governed by the standard of ‘the
best interests of the children.’”
                                - 4 -

     Petitioner’s former spouse did not execute a Form 8332,

Release of Claim to Exemption for Child of Divorced or Separated

Parents, or similar declaration stating that she would not claim

the dependency exemption deduction for either of the two children

for 2005.   Rather, as indicated by respondent’s records,

petitioner’s former spouse claimed petitioner’s two children as

dependents on her 2005 Federal income tax return.    She also

claimed child tax credits with respect to those children for

2005.

     Respondent determined that:    (1) Petitioner is not eligible

for the dependency exemption deductions claimed for the minor

children, or for the child tax credits or the additional child

tax credits claimed for those children; and (2) petitioner is not

entitled to the claimed head of household filing status.

                              Discussion

     A taxpayer may claim a dependency exemption deduction for a

child as long as the child meets the statutory definition of a

“dependent”.   Sec. 151(c).   The term “dependent” means a

“qualifying child”2 or “qualifying relative”.3   Sec. 152(a).

     2
      Sec. 152(c) provides that a “qualifying child” means, with
respect to any taxpayer for any taxable year, an individual who:
(1) Is a child of the taxpayer or a descendant of such child, or
is a brother, sister, stepbrother, stepsister of the taxpayer or
a descendant of any such relative; (2) has the same principal
place of abode as the taxpayer for more than one-half of such
taxable year; (3) has not attained the age of 19 as of the close
of the calendar year in which the taxable year of the taxpayer
                                                   (continued...)
                               - 5 -

Special rules determine which parent may claim a child as a

dependent where the parents are divorced or separated.   See sec.

152(e).

     Before 1985 the custodial parent generally was treated as

the parent that provided more than half of the support for each

child and was entitled to the dependency exemption deduction.

The noncustodial parent, however, was entitled to the dependency

exemption deduction if:   (1) He or she provided $1,200 or more

for the support of the child; and (2) the custodial parent did

not clearly establish by a preponderance of the evidence that he

     2
      (...continued)
begins, or is a student who has not attained the age of 24 as of
the close of such calendar year (with a special rule for disabled
individuals); and (4) has not provided over one-half of such
individual’s own support for the calendar year in which the
taxable year of the taxpayer begins.
     3
      Sec. 152(d) provides that a “qualifying relative” means,
with respect to any taxpayer for any taxable year, an individual:
(1) Who is a child or a descendant of a child; a brother, sister,
stepbrother, or stepsister; the father or mother, or an ancestor
of either; a stepfather or stepmother; a son or daughter of a
brother or sister of the taxpayer; a brother or sister of the
father or mother of the taxpayer; a son-in-law, daughter-in-law,
father-in-law, mother-in-law, brother-in-law, or sister-in-law;
or an individual (other than an individual who at any time during
the taxable year was the spouse, determined without regard to
sec. 7703, of the taxpayer) who, for the taxable year of the
taxpayer, has the same principal place of abode as the taxpayer
and is a member of the taxpayer’s household; (2) whose gross
income for the calendar year in which such taxable year begins is
less than the exemption amount (as defined in sec. 151(d)); (3)
with respect to whom the taxpayer provides over one-half of the
individual’s support for the calendar year in which such taxable
year begins; and (4) who is not a qualifying child of such
taxpayer or of any other taxpayer for any taxable year beginning
in the calendar year in which such taxable year begins.
                              - 6 -

or she provided more than the noncustodial parent.    See sec.

152(e) before amendment by the Deficit Reduction Act of 1984

(DEFRA), Pub. L. 98-369, sec. 423(a), 98 Stat. 799.    In many

situations these rules 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) to provide that for tax

years beginning January 1, 1985, the dependency exemption

deduction is to be given to the custodial parent unless that

parent waives the right to claim it.   Id. at 1499.   Absent a

written declaration that meets the requirements of section

152(e)(2), in the case of a child whose parents are divorced or

separated and together provide over half of the support for the

child, the child is generally treated as being the qualifying

child or qualifying relative of the custodial parent, and that

parent is entitled to the dependency exemption deduction under
                                - 7 -

section 152(e)(1).4   Custody is determined by the most recent

divorce or custody decree.    Sec. 1.152-4(b), Income Tax Regs.

     This Court has rejected claims that a provision allocating

personal exemptions in the divorce decree is sufficient to

entitle a taxpayer to those exemptions pursuant to section

152(e)(2).   Miller v. Commissioner, 114 T.C. 184, 193 (2000).     We

have stated that section 152(e)(2) “clearly and unambiguously

requires the custodial parent to sign a written declaration

releasing the dependency exemption for his or her child to the

noncustodial parent.”   Id.

     In the case at hand the divorce decree granted primary

physical custody of petitioner’s children to petitioner’s former

spouse.   Petitioner’s former spouse had custody of the children

for the greater part of 2005.    She did not execute a Form 8332 or

similar written declaration stating that she would not claim the

children as dependents for 2005, and thus petitioner did not, and


     4
      Sec. 152(e)(2) was amended, effective for tax years
beginning after Dec. 31, 2004, to provide that a child could be
the qualifying child of a noncustodial parent if “a decree of
divorce * * * provides that * * * the noncustodial parent shall
be entitled to any deduction allowable under section 151 * * * or
* * * the custodial parent will sign a written declaration (in
such manner and form as the Secretary may prescribe) that such
parent will not claim such child as a dependent for such taxable
year”. See the Working Families Tax Relief Act of 2004, Pub. L.
108-311, sec. 201, 118 Stat. 1169. This provision might have
afforded petitioner relief, but it was eliminated by retroactive
amendments that restored the DEFRA waiver requirement of sec.
152(e)(2). See Gulf Opportunity Zone Act of 2005, Pub. L. 109-
135, sec. 404, 119 Stat. 2632.
                               - 8 -

could not, attach to his 2005 tax return the required release of

dependency exemption claim for children of divorced parents.   On

the contrary, petitioner’s former spouse claimed the children as

dependents on her 2005 Federal income tax return and claimed

child tax credits with respect to the children, even though such

was evidently in violation of the divorce decree.   Consequently,

we are required to hold that for tax year 2005 petitioner is not

entitled to dependency exemption deductions for the two children

from his previous marriage.

     Petitioner claimed child tax credits and additional child

tax credits for the two children he claimed as dependents.

Section 24(a) authorizes a child tax credit with respect to each

qualifying child of the taxpayer.   The term “qualifying child”

for purposes of the child tax credit is defined in section 24(c)

and as defined therein is more restrictive than the definition

set forth in section 152(c).   A “qualifying child” for purposes

of the child tax credit means a qualifying child as defined in

section 152(c) who has not attained the age of 17 as of the close

of the taxable year.   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
                                - 9 -

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

additional credit.    See sec. 24(d)(1); Economic Growth and Tax

Relief Reconciliation Act of 2001, Pub. L. 107-16, sec.

201(c)(1), (e), 115 Stat. 46, 47.

       A child of separated or divorced parents will be treated as

the qualifying child of the noncustodial parent only if the

requirements of section 152(e)(2), relating to the written

declaration by the custodial parent, are met.    Sec. 152(a)(1),

(e).    Because petitioner did not attach the written declaration

to his 2005 return, petitioner’s children are not qualifying

children with respect to him for 2005.    Therefore, petitioner is

not entitled to claim child tax credits with respect to his

children.    Moreover, petitioner is not entitled to claim

additional child tax credits because the children did not qualify

for child tax credits.

       Finally, we must determine whether petitioner is entitled to

head of household filing status.    Section 1(b) imposes a special

tax rate on an individual filing a Federal income tax return as

head of household.    As relevant here, section 2(b)(1) defines

“head of a household” as an individual taxpayer who:    (1) Is

unmarried at the close of the taxable year; and (2) maintains as

his home a household which constitutes for more than one-half of
                               - 10 -

the taxable year the principal place of abode of a qualifying

child of the taxpayer determined without regard to section

152(e).   Sec. 2(b)(1)(A).   Because petitioner’s children did not

reside with him for more than one-half of the taxable year,

neither are they qualifying children nor did petitioner maintain

a household which constituted their principal place of abode for

more than one-half of the year.   Accordingly, petitioner is not

entitled to head of household filing status for 2005.

     To reflect the foregoing,

                                          Decision will be entered

                                     for respondent.
