                   T.C. Summary Opinion 2005-20



                      UNITED STATES TAX COURT



                 EARL CLYDE MUNCY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7290-03S.               Filed February 23, 2005.


     Earl Clyde Muncy, pro se.

     Terry Serena, for respondent.



     WHERRY, Judge:   This case was heard pursuant to section 7463

of the Internal Revenue Code in effect at the time 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, all section references are to
the Internal Revenue Code (Code) in effect for the year in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
                                - 2 -

     Respondent determined a deficiency in the amount of $4,867

in petitioner’s Federal income tax for the taxable year 2001.2

The issues for decision are:

     (1) Whether petitioner is entitled to dependency exemption

deductions for his two children;

     (2) whether petitioner is entitled to an earned income

credit in the amount of $4,008;

     (3) whether petitioner is entitled to head of household

filing status; and

     (4) whether petitioner is entitled to a child tax credit of

$300.

Background

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

The stipulations of the parties, with accompanying exhibits, are

incorporated herein by this reference.    At the time the petition

was filed, petitioner resided in Iaeger, West Virginia.

     Petitioner was married to Bertha Ann Muncy (Bertha Muncy) on

August 1, 1983, in Grundy, Virginia.    During their marriage, they

had two children, BEM,3 born in 1988, and KLM, born in 1990.

     On June 23, 1997, a divorce proceeding was initiated in the

Circuit Court of McDowell County, West Virginia.    A Final Order

of Divorce (divorce decree) was granted on December 8, 1997, and


     2
         Monetary amounts are rounded to the nearest dollar.
     3
         The Court uses only the initials of the minor children.
                               - 3 -

entered December 23, 1997.   The divorce decree specified:   Bertha

Muncy shall be given custody of the couple’s two children, Earl

Muncy shall pay child support in the amount of $306 per month,

and Earl Muncy shall be entitled to claim the income tax

exemptions for Federal and State income tax purposes for the two

children.

     Petitioner timely filed his Form 1040A, U.S. Individual

Income Tax Return, for the 2001 taxable year, claiming head of

household filing status, two dependency exemption deductions for

his children, an earned income credit, and a child tax credit.

Respondent issued a notice of deficiency on April 11, 2003,

disallowing dependency exemption deductions for petitioner’s two

children, changing the head of household filing status to single,

and denying the earned income credit and child tax credit.

Petitioner timely filed the underlying petition in this case on

May 16, 2003.

     Included in the stipulated exhibits for this case is a copy

of a 2001 calendar and accompanying handwritten notations by

petitioner.   On the calendar, petitioner indicated when the

children stayed with him, which included, among other dates,

every weekend and a 9-week period in the summer.   Petitioner

wrote a note on the calendar asserting that the children were

dropped off at his house every morning at 6 a.m. for school, and

then petitioner bathed them, took them to school, and picked them
                                - 4 -

up from school.    Petitioner added that he bought uniforms for the

children’s after-school activities and paid his child support

every month.

       Julie S. Muncy (Julie Muncy), petitioner’s current wife,

testified that she moved in with petitioner on April 8, 2001, and

she was present when petitioner’s children were dropped off and

picked up at his home.    Julie Muncy also related that she helped

petitioner prepare the calendar to the best of her memory at some

time in the year 2002.

       The parties also stipulated copies of the children’s school

records and copies of each child’s birth certificate establishing

petitioner as each child’s father and Bertha Muncy as each

child’s mother.    Petitioner admitted at trial that the children’s

addresses in the school records were that of their mother, Bertha

Muncy.    On one of the documents pertaining to BEM, a school

counselor included a note stating that BEM currently lived with

his mother but that his parents were in the process of going to

court to determine whether BEM should live with his father.

       At the time of trial, petitioner testified that he presently

had custody of his son, BEM, now age 16.    However, petitioner did

not provide any documentation to establish the custody status of

BEM.

       As a general rule, the Commissioner’s determination of a

taxpayer’s liability is presumed correct, and the taxpayer bears
                                 - 5 -

the burden of proving that the determination is improper.       Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).        Deductions

are a matter of legislative grace, and the taxpayer bears the

burden of proving that he is entitled to any claimed deductions.

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

This includes the burden of substantiation.       Hradesky v.

Commissioner, 65 T.C. 87, 89-90 (1975), affd. per curiam 540 F.2d

821 (5th Cir. 1976).    Although section 7491 may shift the burden

of proof to respondent in specified circumstances, petitioner

here has not established that he meets the prerequisites under

section 7491(a)(1) and (2) for such a shift.

     I.     Dependency Exemptions

     In general, an exemption is allowed for every dependent of a

taxpayer.    Sec. 151(a), (c).   A child of a taxpayer is considered

a dependent if the definitional requirements of section 151(c)(1)

are met and the taxpayer contributed over half of the support for

the child during the taxable year.       Sec. 152(a)(1).

     Where, as here, the parents of the child are divorced,

separated, or living apart at all times during the last 6 months

of the calendar year and where one parent has custody of the

child for more than one-half of the calendar year, the parent

with custody of the child for the greater part of the calendar

year (custodial parent) is deemed to have provided over one-half

of the support for the child for the calendar year.        Sec. 152(e);
                                 - 6 -

King v. Commissioner, 121 T.C. 245, 250 (2003). This preordained

statutory determination is automatic and is made without any

factual inquiry as to which parent actually provided the child’s

support.     Boltinghouse v. Commissioner, T.C. Memo. 2003-134.

      However, there is an exception to this rule that effectively

shifts the dependency exemption to the parent who is not the

custodial parent (noncustodial parent).     Sec. 152(e)(2).     The

exception allows the noncustodial parent to be treated as

providing over one-half of the support for the dependent child

if:   (1) The custodial parent signs a written declaration that,

among other things, such custodial parent will not claim the

dependent child as a dependent for the taxable year, and (2) the

noncustodial parent attaches such written declaration to the

noncustodial parent’s return for that taxable year.     King v.

Commissioner, supra at 249-250; Boltinghouse v. Commissioner,

supra.

      Here, the divorce decree gave “care, custody and control” of

the children to Bertha Muncy.     Furthermore, from a factual

standpoint, the record indicates that after taking into account

visitation rights, the children spent more than one-half of 2001

with Bertha Muncy.4     Therefore, despite the fact that petitioner

was a loving father often taking care of the children for a



      4
          See infra Part II.
                               - 7 -

period of time both before and after school and on weekends,

Bertha Muncy is the custodial parent, and petitioner is the

noncustodial parent.

     The Internal Revenue Service created Form 8332, Release of

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

effect the custodial parent’s waiver of the dependency exemption.

However, to meet the requirements of section 152(e)(2), the

custodial parent’s written declaration need not be made on Form

8332, as long as the submitted declaration conforms to the

substance of Form 8332.   Boltinghouse v. Commissioner, supra

(concluding that a separation agreement conforming to the

substance of Form 8332 satisfied section 152(e)(2)); sec. 1.152-

4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg. 34451

(Aug. 31, 1984).   In addition, neither section 152(e)(2) nor the

regulations thereunder require that the waiver of a spouse’s

claim to a dependency exemption be incorporated into a divorce

decree to be effective.   Boltinghouse v. Commissioner, supra.

     Petitioner did not submit a Form 8332, and at trial, he

admitted that he had not attempted to obtain a Form 8332 from

Bertha Muncy.   The question therefore is whether the divorce

decree conforms to the substance of Form 8332 and satisfies the

requirements of section 152(e)(2).     As the Court explained in

Miller v. Commissioner, 114 T.C. 184, 190 (2000), affd. sub nom.

Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir. 2002):
                              - 8 -

     Form 8332 requires a taxpayer to furnish (1) the names
     of the children for which exemption claims were
     released, (2) the years for which the claims were
     released, (3) the signature of the custodial parent
     confirming his or her consent, (4) the Social Security
     number of the custodial parent, (5) the date of the
     custodial parent’s signature, and (6) the name and
     Social Security number of the parent claiming the
     exemption. * * *

     Specifically, “Satisfying the signature requirement [of the

custodial parent] is critical to the successful release of the

dependency exemption within the meaning of section 152(e)(2)”.

Miller v. Commissioner, supra at 190.    The signature requirement

of section 152(e)(2) demands more than an acknowledgment.     The

signature of the custodial parent must confirm the custodial

parent’s intention to release the dependency exemption to the

noncustodial parent and signify the custodial parent’s agreement

to not claim the dependency exemption.    Id. at 193.   The

signature requirement of section 152(e)(2) is clear and

unambiguous; it requires the custodial parent to sign a written

declaration specifically releasing the dependency exemption for

his or her child to the noncustodial parent.    Id.

     In this case, the divorce decree included the names of

petitioner’s children, and the names and Social Security numbers

of both the custodial parent and noncustodial parent were

handwritten on a page of the divorce decree.   In contrast,

information concerning the years for which the dependency

exemptions for the children were released, the date of the
                                  - 9 -

signature of the custodial parent, and, most importantly, the

signature itself consenting to the release were absent from the

divorce decree.   Therefore, the divorce decree did not conform in

substance to Form 8332, and, consequently, it did not fulfill the

requirements of section 152(e)(2).5

     II.   Earned Income Credit

     Section 32(a) and (c), in relevant part, provides that a

taxpayer may be eligible for the earned income credit if that

taxpayer has a “qualifying child”.        A “qualifying child” is a

child who satisfies a relationship test, a residency test, an age

test, and an identification requirement.        Sec. 32(c)(3).

     BEM and KLM each satisfied all but the residency test.        As a

son and a daughter, respectively, of petitioner, they each

satisfied the relationship test.     See sec. 32(c)(3)(B)(i)(I).      At

the close of the calendar year for the year at issue, neither

child had attained the age of 19, thus satisfying the age test.

See sec. 32(c)(3)(C)(i).   Since petitioner included the name,

age, and TIN of each of his children on his return, he satisfied

the identification requirement.     See sec. 32(c)(3)(D).

     The residency test requires that the qualifying child have

the same principal place of abode within the United States as the

taxpayer for more than one-half of the taxable year.        Sec.


     5
       The record in this case is insufficient to permit a
determination whether the divorce decree was attached to
petitioner’s return when filed.
                                - 10 -

32(c)(3)(A)(ii),(E).    Here, school records and petitioner’s

testimony indicate that the children’s residence with their

mother was their principal place of abode.     Although petitioner

apparently contends that the time during school mornings and

evenings and weekends that the children spent with petitioner

should be counted as additional periods of residency in

petitioner’s home, such contention is misplaced.     While

commendable, the fact that the children stayed at petitioner’s

home for a few hours during the day does not establish

petitioner’s home as the children’s residence or principal place

of abode.   See Jeter v. Commissioner, T.C. Memo. 2001-223, affd.

per curiam 26 Fed. Appx. 321 (4th Cir. 2002).     Likewise, based on

the calendar provided by petitioner, the children spent only 150

days with petitioner.     This amount is less than one-half of the

2001 taxable year.     Since petitioner failed to satisfy the

residency requirement of section 32, neither of petitioner’s

children is considered a qualifying child.

     Nonetheless, individuals who do not have any qualifying

children may also be eligible under section 32(a)(2) for an

earned income credit, subject to, among other things, phaseout

limitations.   Merriweather v. Commissioner, T.C. Memo. 2002-226;

Briggsdaniels v. Commissioner, T.C. Memo. 2000-105, affd. 2 Fed.

Appx. 848 (9th Cir. 2001).     An individual who does not have any

qualifying children is eligible for an earned income credit if:
                                - 11 -

(1) The individual’s principal place of abode is in the United

States; (2) the individual, or his spouse, has attained the age

of 25 but not the age of 65 at the close of the taxable year; and

(3) the individual is not a dependent for whom a deduction is

allowed under section 151.    Sec. 32(c)(1)(A).   Although

petitioner satisfies the eligibility requirements under section

32(c)(1)(A), the phaseout limitation prevents the receipt of any

earned income credit.    The earned income credit for an individual

without any qualifying children is completely phased out in tax

year 2001 when an individual’s modified adjusted gross income

(AGI) exceeds $10,710.   See IRS Pub. 596, Earned Income Credit

(2001).   Petitioner’s modified AGI for 2001 was $13,000.    Thus,

petitioner is not entitled to an earned income credit, and

respondent is sustained on this issue.

     III. Head of Household Filing Status

     As pertinent to this case, head of household filing status

is available if an individual is not married at the close of the

taxable year and provides for more than one-half of the taxable

year a home which is the principal place of abode for the

individual’s son or daughter.    Sec. 2(b)(1).    An individual under

section 2(b) is not considered married if the individual is

“legally separated from his spouse under a decree of divorce or

of separate maintenance”.    Sec. 2(b)(2)(B).
                                - 12 -

     Although petitioner’s divorce decree dated December 8, 1997,

was entered on December 23, 1997, it is not apparent from the

record whether he was married to his current wife, Julie Muncy,

at the close of the 2001 taxable year.     However, we need not

address petitioner’s marital status during that year because

petitioner fails to meet the principal place of abode

requirement.     As determined above, petitioner’s home did not

constitute the principal place of abode for his children during

2001.     Because of this fact, petitioner does not meet the

criteria for the head of household filing status.

     IV.     Child Tax Credit

        Section 24 allows a credit for each “qualifying child” of

the taxpayer.     A “qualifying child” for purposes of section 24 is

an individual who meets the relationship test under section

32(c)(3)(B), has not attained the age of 17 by the close of the

taxable year, and with respect to whom the taxpayer is entitled

to a dependency exemption deduction under section 151.     Sec.

24(c).

        As a son or a daughter of petitioner, petitioner’s children

meet the relationship test.     During the year in issue, neither

child had attained the age of 17.     BEM was 13 years old and KLM

was 11 years old at the close of the taxable year.     However, as

previously discussed, petitioner is not eligible to claim a
                               - 13 -

dependency exemption deduction for either child for 2001.     Thus,

petitioner is not allowed a child tax credit.

     V.     Conclusion

     The Court found the testimony of petitioner and Julie Muncy

to be credible and sincere.    Per the divorce decree, petitioner

was entitled to the dependency exemptions for both of his

children.    However, Congress designed the requirements of

sections 151 and 152 to facilitate administration of the tax law

by assisting the Commissioner in preventing a whipsaw where both

divorced parents attempted to claim the same child as an

exemption and child tax credit.    This was accomplished by

requiring the execution of Form 8332 by the custodial parent.

Petitioner’s remedy in this case is to enforce the divorce decree

either informally by requesting his former spouse’s voluntary

cooperation or, if this is unsuccessful, formally by initiating

proceedings in the West Virginia State courts.

     This Court is sympathetic to petitioner’s case;

nevertheless, since petitioner did not satisfy the requirements

of section 152(e)(2), he is not entitled to dependency exemption

deductions for his children.    Likewise, petitioner does not

qualify for the child tax credit.    As petitioner did not

establish that his home was the principal place of abode for his
                             - 14 -

children, he does not fulfill the prerequisites for a head of

household filing status or the earned income credit.6

     To reflect the foregoing,


                                        Decision will be entered

                                   for respondent.




     6
       To the extent that petitioner also attempts in his
petition to raise as an issue the $265 in statutory interest due
on the deficiency through Mar. 16, 2003, this matter is not
properly before the Court. See secs. 6215, 6404(h), 7481(c).
