                           T.C. Memo. 2003-63



                         UNITED STATES TAX COURT



   MICHAEL S. NORWOOD AND CHRISTINE R. NORWOOD, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



    Docket No.       10281-00.                Filed March 5, 2003.


    Michael S. Norwood and Christine R. Norwood, pro sese.

    Edwina L. Jones, for respondent.



               MEMORANDUM FINDINGS OF FACT AND OPINION


     JACOBS, Judge:      Respondent determined a $2,430 deficiency in

petitioners’   1998    Federal    income   tax.    After   concessions   by

respondent,    the    issues     for   decision   are   whether   for   1998

petitioners are entitled to dependency exemptions under section
                                 - 2 -

1511 and to child tax credits under section 24 for petitioner

Christine Norwood’s two sons.

                           FINDINGS OF FACT

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

stipulation of facts and the attached exhibits are incorporated

herein by this reference.

     Petitioners resided in Walhalla, South Carolina, at the time

their petition was filed with this Court.          Christine R. Norwood

(petitioner) was formerly married to Thomas V. Harbin.        Petitioner

and Mr. Harbin had three children:        Cassandra, born July 23, 1978;

Nicholas, born December 10, 1981; and Jason, born February 13,

1983.    Petitioner and Mr. Harbin separated in September 1988; they

were divorced in October 1989.

     On May 23, 1989, the Family Court, State of South Carolina,

County of Oconee (the Family Court), issued an order (the May 23,

1989, order) that incorporated an agreement between the parties.

At that time, both parties were employed, but the possibility

existed that Mr. Harbin might be laid off and become disabled due

to pending back surgery.

     The May 23, 1989, order provided, among other things, that

petitioner   would   maintain   medical    insurance   coverage   for   her

children and petitioner and Mr. Harbin would divide equally all


     1
          Section references are to the Internal Revenue Code in
effect for the year at issue.
                                     - 3 -

medical,   dental,       and   pharmaceutical          expenses   not   covered   by

petitioner’s insurance. The May 23, 1989, order also provided that

(a) for 1989 and for alternate years thereafter, Mr. Harbin could

claim two of the three children as dependents on his income tax

returns, and (b) for 1990 and for alternate years thereafter,

petitioner could claim two of the three children as dependents on

her income tax returns, “continuing until the oldest child attains

majority”.2     Petitioner         and       Mr.   Harbin    claimed    dependency

exemptions for Nicholas and Jason for the respective years as

provided in the May 23, 1989, order.               Neither claimed a dependency

exemption for Cassandra.

     The children lived with petitioner until February/March 1993,

when the children began residing with Mr. Harbin.                 On May 21, 1993,

the Family Court held a hearing with regard to a motion for

temporary relief filed by Mr. Harbin on April 27, 1993.                    At that

hearing, petitioner agreed that it would be in the children’s best

interests for Mr. Harbin to have custody of them.                 On May 26, 1993,

the Family Court issued an order (the May 26, 1993, order) that

stated:

     IT IS, THEREFORE, ORDERED, ADJUDGED, AND DECREED:

          1. The Plaintiff [Mr. Harbin] is granted custody of
     Cassandra * * *, Nicholas * * *, and Jason * * *.

           *         *         *         *         *        *       *

     2
          Cassandra, the eldest child, attained majority age of
18 on July 23, 1996.
                              - 4 -

          3.   The Defendant [petitioner] shall pay child
     support through the Family Court Support Clerk at the
     rate of fifty dollars per month beginning June 1, 1993.
     The Defendant shall pay a 3% collection fee making her
     payment total $51.50. Should Defendant fail to pay child
     support as ordered she may be subjected to wage
     garnishment and/or contempt of court proceedings.

          4. The Defendant shall maintain insurance on the
     children, and the parties shall evenly divide and pay for
     any extraordinary medical, dental, and pharmaceutical
     expenses of the children.

          5. The Defendant shall notify the Plaintiff if she
     gains full-time employment or social security disability.

As of June 1993, Mr. Harbin’s gross income was $1,733.33 per month,

whereas, petitioner had a monthly income of $291.63.

     Sometime between June and September 1993, petitioner began

receiving disability payments from Social Security of approximately

$200 per month; these payments were sent to Mr. Harbin for the

support of the children.   On October 14, 1993, the Family Court

issued another order that terminated as of September 1, 1993,

petitioner’s obligation to pay child support through the court to

Mr. Harbin.

     During 1998, Nicholas and Jason resided with Mr. Harbin.

Cassandra and her daughter, Brooklyn Harbin (Brooklyn), resided

with petitioners.

     On their 1998 Form 1040A, U.S. Individual Income Tax Return,

petitioners claimed dependency exemption deductions and child tax

credits for Nicholas, Jason, and Brooklyn. However, petitioners did

not attach to their 1998 Form 1040A, nor did they send under
                                   - 5 -

separate cover to respondent, a copy of Form 8332, Release of Claim

to Exemption for Child of Divorced or Separated Parents, signed by

Mr. Harbin who was the custodial parent.

     On August 18, 2000, respondent mailed a notice of deficiency

to petitioners. In that notice, respondent disallowed petitioners’

claimed exemption deductions and child tax credits for Nicholas,

Jason, and Brooklyn on the grounds that petitioners failed to verify

petitioners’ entitlement thereto.           Prior to trial, respondent

conceded petitioners’ entitlement to an exemption deduction and

child tax credit for Brooklyn.

                                  OPINION

Dependency Exemption

     In general, a taxpayer is entitled to an exemption for each

dependent child under 19 years of age.            Sec. 151(c)(1)(B)(i).     To

be so entitled, the taxpayer must provide (or                be   treated   as

providing) over half of the child’s support in the year for which

the exemption is claimed.      Sec. 152(a).   Where parents are divorced

or separated, the parent who has physical custody of a child for the

greater   portion   of   the   calendar    year    (the   custodial   parent)

generally is deemed to have provided more than half of such child’s

support in that year.     Sec. 152(e)(1).

     Section 152(e)(2), however, provides an exception to the

general rule of section 152(e)(1). Under section 152(e)(2), a child
                                   - 6 -

will be treated as receiving more than half of his support during

a calendar year from the noncustodial parent if:

           (A) the    custodial   parent    signs   a   written
      declaration (in such manner and form as the Secretary may
      by regulations prescribe) that such custodial parent will
      not claim such child as a dependent for any taxable year
      beginning in such calendar year, and

           (B) the noncustodial parent attaches such written
      declaration to the noncustodial parent’s return for the
      taxable year beginning during such calendar year. [Sec.
      152(e)(2)(A) and (B).]

      The Internal Revenue Service has prescribed Form 8332 as the

appropriate form by which the noncustodial parent may satisfy the

written declaration requirement of section 152(e)(2).             See Miller

v. Commissioner, 114 T.C. 184, 190 (2000), affd. on another ground

sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir. 2002);

sec. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg.

34459 (Aug. 31, 1984).         Form 8332 requires, among other things,

that the custodial parent declare that he or she will not claim an

exemption for the child or children named on the form for the years

for which the exemption claim is being released.

      In the case before us, petitioner does not dispute that for

1998, Mr. Harbin was the custodial parent of Nicholas and Jason.

As   such,   he   ordinarily   would   be   entitled   to   the   dependency

exemptions for Nicholas and Jason for 1998.        To claim Nicholas and

Jason as dependents for 1998, petitioner, as the noncustodial

parent, would have had to have attached to her 1998 income tax
                                    - 7 -

return a copy of Form 8332, signed by Mr. Harbin, releasing his

claim to the exemptions.     This she did not do.

     Petitioner’s assertion that she is entitled to claim the

dependency exemptions for Nicholas and Jason in 1998 is premised

on the May 23, 1989, order which states that petitioner and Mr.

Harbin may claim two dependents in alternate years.                     However,

petitioners’ position is not supported by the May 23, 1989, order

because it specifically states that those provisions of the order

relating to the parent who may claim the dependency exemptions

terminate when “the oldest child attains majority”.                 (Petitioner’s

oldest child, Cassandra, turned 18 on July 23, 1996.)                 Petitioner

contends “that is not what the judge intended.”                     According to

petitioner, the judge meant to say in his order “until your youngest

child (not the oldest child) is 18 years old.”

     Even if, as petitioner asserts, the May 23, 1989, order was in

error, that order was superseded by the May 26, 1993, order giving

sole custody of the children to Mr. Harbin.                See sec. 1.152-4(b),

Income Tax Regs. (custody determined by most recent decree).                Under

Federal tax law, Mr. Harbin, as custodial parent, was entitled to

dependency     exemptions    for        Nicholas     and    Jason     for   1998.

Consequently, any order issued by the Oconee County Family Court

(even   an   order   attempting    to    grant     dependency   exemptions    for

Nicholas and Jason to petitioner for 1998) would not per se entitle

petitioner, as the noncustodial parent, to the claimed dependency
                                      - 8 -

exemptions     for   Nicholas   and   Jason   for   1998.   See   Miller   v.

Commissioner, supra.         Petitioners did not attach to their 1998

income tax return a written declaration signed by Mr. Harbin

releasing his right to dependency exemptions for Nicholas and Jason

for 1998. Thus, under Federal tax law, petitioners are not entitled

to the dependency exemptions for Nicholas and Jason.              To conclude

this aspect of our opinion, because petitioner, the noncustodial

parent, did not meet the written declaration requirement, she does

not    come   within   the   statutory   exception    provided    in   section

152(e)(2).     See Loffer v. Commissioner, T.C. Memo. 2002-298; Horn

v. Commissioner, T.C. Memo. 2002-290; Neal v. Commissioner, T.C.

Memo. 1999-97; Cafarelli v. Commissioner, T.C. Memo. 1994-265; Brown

v.    Commissioner, T.C. Memo. 1992-548, affd. without published

opinion 7 F.3d 1042 (8th Cir. 1993).            Accordingly, we hold that

petitioner is not entitled to the claimed dependency exemptions for

Nicholas and Jason for 1998.

Child Tax Credit

       Section 24(a) provides that a taxpayer may claim a credit for

“each qualifying child”. A qualifying child is defined, inter alia,

as any individual if “the taxpayer is allowed a deduction under

section 151 with respect to such individual for the taxable year”
                                   - 9 -

and the child is under the age of 17 at the close of the calendar

year for which the tax credit is claimed.3         Sec. 24(c)(1)(A) and

(B).

       Because petitioner is not entitled to dependency exemptions

under section 151 with respect to Nicholas and Jason for 1998,

petitioner    does   not   have   an   eligible   or   qualifying   child.

Accordingly, petitioner is not entitled to the claimed child tax

credits under section 24(a) with respect to Nicholas and Jason for

1998.

       To reflect the foregoing and respondent’s concessions,



                                             Decision will be entered

                                        under Rule 155.




       3
          We are mindful that Nicholas was born on Dec. 10, 1981,
and therefore reached age 17 on Dec. 10, 1998. Consequently,
even if petitioner were entitled to a dependency exemption for
Nicholas (which she is not), Nicholas would not be a “qualifying
child” for purposes of the child tax credit.
