                       T.C. Memo. 1996-126



                     UNITED STATES TAX COURT



             NORMAN ALFONZO WILLIAMS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 27006-93.         Filed March 13, 1996.


     Norman Alfonzo Williams, pro se.

     Joanne B. Minsky, for respondent.

                       MEMORANDUM OPINION

     GOLDBERG, Special Trial Judge: This case was heard pursuant

to section 7443A(b)(3) and Rules 180, 181, and 182.1   Respondent

determined deficiencies in petitioner's 1989 and 1990 Federal

income taxes in the respective amounts of $1,498 and $1,536, and




1
     Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years at issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
                                  2

an addition to tax for 1989 pursuant to section 6651(a)(1) in the

amount of $145.

     The issues for decision are: (1) Whether petitioner is

entitled to five dependency exemptions under section 151 for the

years at issue; and (2) whether petitioner is liable for an

addition to tax for failure to file a timely return for 1989

under section 6651.

     Some of the facts have been stipulated and are so found.

The stipulation of facts and exhibits received into evidence are

incorporated by this reference.       Petitioner resided in Eaton

Park, Florida, at the time he filed his petition.

     Petitioner married Grace Williams in September 1974.      Five

children were born of this marriage:       (1) Samson, born December

15, 1975; (2) Faith, born October 13, 1977; (3) Jesus, born July

14, 1979; (4) Norman, born December 30, 1980; and (5) Mary, born

November 30, 1982.    Petitioner and Grace Williams separated in

May 1984, and, on October 11, 1984, an Order of Support was

entered.   On June 17, 1985, a divorce decree was entered in the

Circuit Court for Polk County, Florida.       Pursuant to the Order of

Support and divorce decree, Grace Williams received sole custody

of the children, with reasonable visitation allowed petitioner,

and monthly child support of $150 to be paid by petitioner.

There was no provision in the divorce decree providing which

parent would be entitled to claim the children as "dependents"

under section 151(c).    No written document was ever executed by
                                   3

Grace Williams declaring that she would not claim her children as

"dependents".

     During the years at issue, the children lived with their

mother but visited petitioner on weekends and in the summer

months.   Petitioner testified that he was often late making his

support payments, and, for several years, his Federal and State

tax refund checks were withheld and turned over to the State of

Florida for application to his arrearages.    The parties stipulate

that petitioner paid aggregate child support during 1989 and 1990

of $1,879.03 and $2,199.84, respectively.    Because Grace Williams

was unemployed during the years at issue, the children received

the following support from Federal and State agencies:

Program                                             1989     1990

Aid to families with dependent children (AFDC)    $6,372   $6,352
Food stamps                                        3,708    5,269

Moreover, all of the children were eligible for Medicaid coverage

and benefits, and the entire family lived in subsidized housing

provided by the State.

     Petitioner's 1989 Federal income tax return was due on or

before April 15, 1990.    Petitioner did not file any requests for

extensions to file, and respondent received petitioner's 1989

return on February 4, 1991.    On his 1989 and 1990 Federal income

tax returns, petitioner claimed each of the five children as

dependents.     In the notice of deficiency, respondent determined

that petitioner was not entitled to dependency exemptions for any
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of his children because petitioner had not established that he

was the custodial parent or that the requirements of section 152

to qualify the children as "dependents" had been met for the

years at issue.

     The determinations by respondent in a notice of deficiency

are presumed correct, and the burden of proof is on the taxpayer

to prove that the determinations are erroneous.   Rule 142(a);

Welch v. Helvering, 290 U.S. 111 (1933).   Section 151(c) allows

taxpayers an annual exemption amount for each "dependent" as

defined in section 152.   According to section 152(a), the term

"dependent" means certain individuals, such as a son or daughter,

"over half of whose support, for the calendar year in which the

taxable year of the taxpayer begins, was received from the

taxpayer (or is treated under subsection (c) or (e) as received

from the taxpayer)".

     The support test in section 152(e)(1) applies if:   (1) A

child receives over half of his support during the calendar year

from his parents; (2) the parents are divorced under a decree of

divorce; and (3) such child is in the custody of one or both of

his parents for more than one-half of the calendar year.   If

these requirements are satisfied,

     such child shall be treated, for purposes of subsection
     (a), as receiving over half of his support during the
     calendar year from the parent having custody for a
     greater portion of the calendar year (* * * referred to
     as the custodial parent).

Sec. 152(e)(1).
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     To decide who has "custody", section 1.152-4(b), Income Tax

Regs., provides that custody "will be determined by the terms of

the most recent decree of divorce" if there is one in effect.

Since petitioner's divorce decree grants custody of each of the

five children to his ex-wife, Grace Williams, she is considered

the children's "custodial parent" under section 152(e).   As the

"noncustodial parent", petitioner is treated as providing over

half of a child's support and allowed to claim such child as a

dependent if any one of three statutory exceptions is met:

          (1)(a) The custodial parent signs a written
     declaration that such custodial parent will not claim
     such child as a dependent, and

          (b) the noncustodial parent attaches such written
     declaration to the noncustodial parent's return for the
     taxable year (section 152(e)(2));

          (2) a multiple support agreement pursuant to section
     152(c) determines support (section 152(e)(3)); or

          (3)(a) a qualified pre-1985 instrument provides that
     the noncustodial parent shall be entitled to any deduction
     allowable under section 151 for such child, and

          (b) the noncustodial parent provides at least $600 for
     the support of such child during the calendar year (section
     152(e)(4)).

     A threshold requirement for the applicability of the special

rules of section 152(e) in the case of divorced parents is that

the parents must provide over one-half of the child's support.

Sec. 1.152-4(a), Income Tax Regs.   Therefore, if a third party,

such as a Federal or State agency, were to provide 50 percent or

more of a child's support, neither parent would be entitled to
                                  6

claim an exemption.   See, e.g., Hopkins v. Commissioner, 55 T.C.

538, 540-541 (1970); Leggett v. Commissioner, T.C. Memo. 1976-7;

Batchelor v. Commissioner, T.C. Memo. 1970-24.

     In the instant case, Grace Williams was unemployed during

1989 and 1990 and provided no direct financial support for her

children.    The support provided by petitioner in 1989 and 1990

was significantly less than that provided by Federal and State

agencies in the form of AFDC payments, medicaid, food stamps, and

subsidized housing.    Therefore, we conclude that petitioner and

Grace Williams did not provide more than one-half of the support

of their five children during the years at issue.    Furthermore,

Grace Williams did not sign a written declaration that she would

not claim her children as dependents, and there is no evidence of

a multiple support agreement.    Based on the foregoing, we

conclude that petitioner is not entitled to claim any of his five

children as dependents, and respondent's determination

disallowing the dependency exemptions claimed by petitioner is

sustained.

     Next we consider whether petitioner is liable for an

addition to tax under section 6651.    This section imposes an

addition to tax for failure to timely file a tax return.      The

addition to tax is equal to 5 percent of the amount of the tax

required to be shown on the return if the failure to file is for

not more than 1 month, with an additional 5 percent for each

month in which the failure to file continues, to a maximum of 25
                                   7

percent of the tax.   The addition to tax is applicable unless it

is established that the failure to file is due to reasonable

cause and not due to willful neglect.    Sec. 6651(a)(1).

Petitioner bears the burden of establishing that he is not liable

for this addition to tax.   Rule 142(a).

     Petitioner filed his 1989 Federal income tax return on

February 4, 1991, almost 1 year after the return was due.     He

filed no requests for extensions and presented no evidence as to

why the return was untimely.     Therefore, we sustain respondent on

this issue.

     To reflect the foregoing,

                                           Decision will be entered

                                           for respondent.
