                          T.C. Summary Opinion 2016-18


                         UNITED STATES TAX COURT



          RICHARD A. EICHINGER AND DIANA SUAREZ, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 25369-12S L.                       Filed April 21, 2016.



      Richard A. Eichinger and Diana Suarez, pro sese.

      Mark J. Tober, for respondent.



                              SUMMARY OPINION


      ARMEN, Special Trial Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect when the

petition was filed.1 Pursuant to section 7463(b), the decision to be entered is not



      1
         Unless otherwise indicated, all section references are to the Internal
Revenue Code, as amended and in effect at all relevant times. All Rule references
are to the Tax Court Rules of Practice and Procedure.
                                         -2-

reviewable by any other court, and this opinion shall not be treated as precedent

for any other case.

      This case is before the Court on a petition for review of respondent’s

determination to sustain the filing of a notice of Federal tax lien relating to an

assessment of income tax, as well as accrued penalties and interest, for 2009. See

secs. 6320(c), 6330(d)(1).

      The sole issue presented to the Court for decision at the trial of this case in

December 2015 was whether petitioners are entitled to dependency exemption

deductions for the three children of petitioner Richard A. Eichinger and his former

wife Christel Eichinger.2

                                     Background

      Petitioners resided in the State of Florida at the time that the petition was

filed with the Court.


      2
         After a prior trial in May 2014 the Court decided that petitioners were not
barred by sec. 6330(c)(2)(B) from challenging the existence or amount of the
underlying liability for 2009 and remanded the case to the Internal Revenue
Service (IRS) Appeals Office for further proceedings. The parties were not
successful in settling the case, and it was therefore recalendared for trial at the
Court’s trial session in Tampa, Florida, in December 2015.
       In a prior opinion in docket No. 9843-08 the Court upheld respondent’s
disallowance of, inter alia, petitioner Richard A. Eichinger’s claim of dependency
exemption deductions for 2006 for children he had with his former wife Christel
Eichinger. Eichinger v. Commissioner, T.C. Memo. 2010-123.
                                         -3-

      Petitioner Richard A. Eichinger (Mr. Eichinger) married Christel Eichinger

in July 1989. The couple had three children, a daughter born in 1989, a second

daughter born in 1993, and a son born in 1996 (collectively, the three children;

individually, the older daughter, the younger daughter, and the son).

      In March 1999 when the family was living in Ft. Wayne, Indiana, Mr.

Eichinger and Christel Eichinger separated, at which time Christel Eichinger filed

a petition for dissolution of marriage in the Circuit Court for Allen County,

Indiana (circuit court).3 In 2001 the circuit court entered its decree of dissolution

of marriage.4 After making exhaustive findings regarding the fitness of each

parent, the circuit court expressly concluded that an award of joint legal custody

would not be in the best interest of the three children and granted Christel

Eichinger sole legal custody of the three children.

      Christel Eichinger continued to live in Ft. Wayne, Indiana, after the divorce

with the three children. Mr. Eichinger also continued to live in the area for a

while but later moved to Ohio; in 2008 he relocated to Orlando, Florida, where he

has lived ever since.




      3
          The county seat of Allen County, as well as the largest city, is Ft. Wayne.
      4
          Mr. Eichinger challenged the decree but was not successful.
                                         -4-

      During 2009 the Eichingers’ older daughter lived with her mother Christel

Eichinger in Ft. Wayne, Indiana, and attended college full time as a day student at

Saint Francis University in Ft. Wayne. During 2009 the Eichingers’ younger

daughter and son also lived with their mother Christel Eichinger in Ft. Wayne and

attended public school (high school and middle school, respectively) in Ft. Wayne.

      One or more of the children visited Mr. Eichinger in Orlando, Florida,

during 2009, but the time each child spent with him during these visits was less

than the time that any of the children spent living with their mother Christel

Eichinger in Ft. Wayne, Indiana.

      At all relevant times the three children received most of their support from

their parents.5 Also at all relevant times the three children lived with one or the

other of their parents throughout the year.

      In 2009 Mr. Eichinger and petitioner Diana Suarez (collectively, petitioners)

were married, and they filed a joint income tax return for that year. On their return

petitioners claimed dependency exemption deductions for Mr. Eichinger’s three

children by his former wife Christel Eichinger. Petitioners did not attach to their

return a Form 8332, Release/Revocation of Release of Claim to Exemption for


      5
        Mr. Eichinger provided support generally through court-ordered payroll
deductions.
                                         -5-

Child by Custodial Parent, or a similar written statement, signed by Christel

Eichinger, as Christel Eichinger never executed such a form or a similar written

statement.6

      An examination of petitioners’ 2009 return concluded with the issuance of a

notice of deficiency in which respondent disallowed the dependency exemption

deductions for the three children. Although properly mailed, the notice of

deficiency was not actually received by petitioners in time for them to commence

an action for redetermination. Accordingly, respondent assessed the deficiency

and sent petitioners notice and demand for payment. When the amount owing was

not paid, respondent filed a notice of Federal tax lien and sent petitioners a notice

of lien filing. Petitioners responded by filing a request for administrative review.

Ultimately, the IRS Appeals Office sustained the filing of the lien and sent

petitioners a notice of determination. Petitioners then timely commenced the

instant action.

                                     Discussion

      The Court decides the disputed issue in this case de novo, see Sego v.

Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176,

      6
         It would appear from the record that Mr. Eichinger never asked Christel
Eichinger to execute a Form 8332 or a similar written statement, perhaps because
their relationship remained acrimonious after their divorce.
                                         -6-

181-182 (2000), and, on the record presented, without regard to the burden of

proof, see Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933); cf. sec.

7491(a). In so doing, the Court is mindful of the fundamental principles

articulated by the U.S. Supreme Court that deductions are a matter of legislative

grace and a taxpayer must therefore be entitled under law to any deduction

claimed on a tax return. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84

(1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).

      In computing taxable income section 151(c) allows as a deduction an

exemption for each dependent of a taxpayer. Section 152(a) defines the term

“dependent” to mean either a “qualifying child”, see sec. 152(a)(1), (c), or a

“qualifying relative”, see sec. 152(a)(2), (d), of the taxpayer. In order to be a

taxpayer’s qualifying child, an individual must: (A) bear a specified relationship

to the taxpayer; (B) have the same principal place of abode as the taxpayer for

more than one-half of the taxable year; (C) meet certain age requirements; (D)

have not provided more than one-half of his or her own support for the year; and,

if married, (E) have not filed a joint return (other than only for a claim of refund)

with his or her spouse. Sec. 152(c)(1). The term “qualifying relative” means an

individual: (A) who bears a specified relationship to the taxpayer; (B) whose

gross income is less than the exemption amount; (C) with respect to whom the
                                         -7-

taxpayer provides over one-half of the individual’s support; and (D) who is not a

qualifying child of the taxpayer or of any other taxpayer. Sec. 152(d)(1)(D).

      During 2009 the Eichingers’ three children attended school and resided with

their mother Christel Eichinger in Ft. Wayne, Indiana, for most of the year. Thus,

the three children did not have the same principal place of abode as Mr. Eichinger

and, for that reason, were not his qualifying children under section 152(c)(1) for

2009. See sec. 152(c)(1)(B). Nor were the three children the qualifying relatives

of Mr. Eichinger under section 152(d)(1) for 2009, as the three children were the

qualifying children of Christel Eichinger for that year. See secs. 152(c)(1),

(d)(1)(D).

      Notwithstanding the foregoing, a special rule exists in the case of parents

who are divorced or separated or who live apart at all times during the last six

months of the calendar year. This special rule is set forth in section 152(e) and

serves to determine which parent is entitled to a dependency exemption deduction

for a child. Thus, under section 152(e)(1) and as relevant herein, a child who is in

the custody of one or both of the child’s parents for more than one-half of the

calendar year and who receives more than one-half of his or her support for the

year from his or her parents is considered the qualifying child of the noncustodial

parent if (1) the custodial parent signs a written declaration that she will not claim
                                        -8-

such child as a dependent and (2) the noncustodial parent attaches the written

declaration to his return. Sec. 152(e)(2); sec. 1.152-4(b), Income Tax Regs.; see

Miller v. Commissioner, 114 T.C. 184, 190-191 (2000), aff’d sub nom. Lovejoy v.

Commissioner, 293 F.3d 1208 (10th Cir. 2002).

      For purposes of section 152(e), the term “custodial parent” means the parent

having custody for the greater portion of the calendar year, whereas the term

“noncustodial parent” means the parent who is not the custodial parent. Sec.

152(e)(4). Applicable regulations expand on the meaning of these terms. Thus,

section 1.152-4(d)(1), Income Tax Regs., provides in pertinent part as follows:

      (d) Custodial parent--(1) In general.--The custodial parent is the
      parent with whom the child resides for the greater number of nights
      during the calendar year, and the noncustodial parent is the parent
      who is not the custodial parent. A child is treated as residing with
      neither parent if the child is emancipated under state law. For
      purposes of this section, a child resides with a parent for a night if the
      child sleeps--
             (i) At the residence of that parent (whether or not the parent is
      present); or
             (ii) In the company of the parent, when the child does not sleep at a
      parent’s residence (for example, the parent and child are on vacation
      together).

Clearly as to the minor children, i.e., the younger daughter and the son, Christel

Eichinger was the custodial parent, having both legal custody as well as physical

custody for more than one-half of the year. Presumably she never released her
                                       -9-

claim to exemption pursuant to section 152(e)(2), as petitioners never attached to

their return any Form 8332 or similar written statement. Under these

circumstances it follows that petitioners are not entitled to dependency exemption

deductions for Mr. Eichinger’s younger daughter and son. See sec. 152(e)(2).

      Insofar as the older daughter is concerned, she may have been an “adult” in

2009. See Ind. Code Ann. sec. 1-1-4-5(1) (LexisNexis 2012). However, given

that she was both under 21 years of age in 2009 and a full-time university day

student who lived at home with her mother Christel Eichinger during that year, it

would appear that the older daughter was not emancipated under Indiana law. See

id. sec. 31-16-6-6 (LexisNexis 2007 & Supp. 2015) (before its amendment

effective July 1, 2012, lowering the operative age from 21 years to 19 years);

Hirsch v. Oliver, 970 N.E.2d 651 (Ind. 2012). Thus, for 2009 Christel Eichinger

would have been the custodial parent. See sec. 152(e)(4)(A); sec. 1.152-4(d)(1),

Income Tax Regs. Accordingly, given the absence of any Form 8332 or similar

written statement, petitioners would not be entitled to a dependency exemption

deduction for Mr. Eichinger’s older daughter.7 See sec. 152(e)(2).

      7
         On the other hand, even if the older daughter were emancipated in 2009,
thereby rendering the special rule of sec. 152(e) inapplicable, Kaechele v.
Commissioner, T.C. Memo. 1992-457; see sec. 1.152-4(g), (Example) (6), Income
Tax Regs., petitioners would still not be entitled to a dependency exemption
                                                                      (continued...)
                                       - 10 -

      On brief petitioners argue that they provided more than one-half of the

support (through court-imposed impounds of Mr. Eichinger’s salary) for the three

children in 2009. However, the Court need not consider whether the evidentiary

record would support such a finding of fact because the matter is irrelevant as a

matter of law. Thus, as previously discussed, for a noncustodial parent such as

Mr. Eichinger the touchstone for decision is whether the custodial parent executed

a Form 8332 (or a similar written statement) and whether the noncustodial parent

then attached such form (or statement) to his return.8 See id.

      Finally, petitioners argue that “The taking of additional tax from Eichinger

& Suarez who are entitled to dependency deductions for all of the children they

support amounts to a harsh and oppressive unconstitutional taking of their

property.” But, as previously stated, the U.S. Supreme Court has made clear for

many years that deductions are a matter of legislative grace and a taxpayer must


      7
        (...continued)
deduction because Mr. Eichinger’s older daughter did not have the same principal
place of abode as petitioners for more than one-half of the year, see sec.
152(c)(1)(B), and she was still the qualifying child of Christel Eichinger, see
152(d)(1)(D). See sec. 1.152-4(g), Example 6, Income Tax Regs., indicating that
if sec. 152(e) and 1.152-4, Income Tax Regs., do not apply, then whether an
individual is qualifying child or a qualifying relative is determined under sec.
152(c) or (d).
      8
         To the extent that sec. 152(e)(2) might not be applicable, see supra note 7,
the child’s principal place of abode becomes determinative.
                                         - 11 -

therefore be entitled under law to any deduction claimed on a tax return.

INDOPCO, Inc. v. Commissioner, 503 U.S. at 84; New Colonial Ice Co. v.

Helvering, 292 U.S. at 440. In that regard, this Court stated as follows in a case

remarkably similar to the instant one:

             Congress created several objective tests in section 152. These
      tests draw bright lines, and without these tests there would need to be
      rules that are sensitive to a wide variety of family circumstances.
      Such rules would be difficult to craft and hard for the Commissioner
      and the Courts to administer and would likely require Government
      intrusion into delicate family issues.

            The Court is required to apply the law as passed by Congress,
      and the rules of section 152(c), (d), and (e) are explicit. Section 152
      prevents a parent in petitioner’s circumstances from claiming a
      dependency exemption deduction, irrespective of the amount of
      financial support he provided his children.

Walters v. Commissioner, T.C. Memo 2012-230, at *5. Further, the Walters

opinion was cited with approval by the Court in George v. Commissioner, 139

T.C. 508, 518-519 (2012), which went on to add the following: “Our obligation to

follow the statute as written applies whether the resulting disadvantage is suffered

by a custodial parent who executed a Form 8332 but bore an undue and

unintended burden of child support, or is instead suffered by a noncustodial parent

who bore the burden of child support but did not receive an executed Form 8332.
                                        - 12 -

See Armstrong v. Commissioner, 139 T.C. 468 (2012) [, aff’d, 745 F.3d 890 (8th

Cir. 2014].”

                                     Conclusion

      In order to give effect to our disposition of the sole disputed issue,


                                                       Decision will be entered

                                                 for respondent.
