                  T.C. Summary Opinion 2006-46



                     UNITED STATES TAX COURT



   CLIFFORD RAY WOOD, SR., AND DANIELLE DENISE LEVERING-WOOD,
  Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 15860-04S.             Filed March 29, 2006.


     Clifford Ray Wood, Sr., pro se.

     James H. Harris, for respondent.



     GOLDBERG, Special Trial 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.    The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.   Unless otherwise indicated,

subsequent section references are to the Internal Revenue 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 petitioners’ Federal

income tax of $1,650 for the taxable year 2002.

     The issue for decision is whether petitioners are entitled

to claim a dependency exemption deduction for JW1 for taxable

year 2002.

                             Background

     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

Newark, Delaware, on the date the petition was filed in this

case.

     On April 24, 1999, Clifford Wood, Sr. (petitioner) and

Stephanie Wood (Ms. Wood), petitioner’s former wife, were

married.    During the marriage, petitioner and Ms. Wood had one

child, JW, born in 2000.    Petitioner and Ms. Wood were divorced

in 2001.2

     Petitioner and Ms. Wood’s divorce was granted by a final

divorce decree entered by the Family Court of the State of

Delaware In and For New Castle County.    On November 16, 2001,

petitioner and Ms. Wood entered into a separation agreement that

was incorporated into the final divorce decree.    The separation



     1
        The Court uses only the minor child’s initials.
     2
      After his divorce from Ms. Wood, petitioner married
petitioner Danielle Denise Levering-Wood in July of 2002.
                                - 3 -

agreement was signed by petitioner, Ms. Wood, and their

respective counsel.   The separation agreement states, in

pertinent part, as follows:

          THIS AGREEMENT, dated this 16 day of Nov., A.D., 2001,
     is made between STEPHANIE WOOD (hereinafter referred to as
     “Wife”) [Ms. Wood], and CLIFFORD WOOD, SR., (hereinafter
     referred to as “Husband”) [petitioner].

                              RECITALS

          WHEREAS, the parties, Stephanie Wood and Clifford Wood,
     Sr., were married in due form on April 24, 1999; and

          WHEREAS, one child was born to the marriage of the
     parties; namely, * * * [JW, born in 2000];

          WHEREAS, diverse disputes, and unhappy differences
     arose between Husband and Wife, the said parties legally
     separated on May 25, 2001, and are planning to live separate
     and apart from one another during the remainder of their
     respective lives; and

          WHEREAS, the parties have reached an agreement
     regarding the division of their marital property and debt,
     custody, visitation, child support, and all other matters
     ancillary to their separation.

          NOW, THEREFOR [sic], in consideration of these facts
     and circumstances and of the mutual promises made in this
     Agreement, Husband and Wife each agree:

               *      *   *     *       *   *   *

     CHILD CUSTODY/VISITATION

     3.   Parties shall have joint custody with Wife being the
     primary residential parent.

     4.   Husband shall have visitation that is equivalent to the
     Standard Visitation Guidelines.

          The days that Husband shall exercise his visitation
     will be by mutual agreement as long as Husband notifies Wife
     within twenty-four (24) hours of receiving his monthly work
     schedule at or before the beginning of each month. Should
                               - 4 -

      Husband’s work schedule change from that given to Wife at
      the beginning of each month, Husband shall notify Wife as
      soon as possible or at least within twenty-four (24) hours
      of the date that visitation is being changed.

      On April 29, 2004, the Family Court of the State of Delaware

In and For New Castle County issued an Order modifying custody of

JW.   As the present case pertains to the taxable year 2002, such

Order is not relevant.   However, the Court notes that in the

Order dated April 29, 2004, the Family Court of the State of

Delaware ordered that Ms. Wood retain primary residential custody

of JW.

      Petitioners filed a Form 1040, U.S. Individual Income Tax

Return, for the 2002 taxable year.     Petitioners did not attach a

Form 8332, Release of Claim to the Exemption for Child of

Divorced or Separated Parents, or any statement, waiver, or

declaration conforming to the substance of Form 8332 to their

2002 Federal income tax return.   Ms. Wood did not sign a Form

8332 or any statement or waiver stating that she was releasing

her claim to the exemption for JW.     In their 2002 Federal income

tax return, petitioners claimed a dependency exemption deduction

for JW.

      Respondent disallowed the claimed dependency exemption

deduction for JW.   Accordingly, respondent issued to petitioners

a notice of deficiency determining a deficiency of $1,650 in

petitioners’ 2002 Federal income tax.
                                 - 5 -

                              Discussion

     In general, the Commissioner’s determination set forth in a

notice of deficiency is presumed correct.       Welch v. Helvering,

290 U.S. 111, 115 (1933).    In pertinent part, Rule 142(a)(1)

provides the general rule that “The burden of proof shall be upon

the petitioner”.    In certain circumstances, however, if the

taxpayer introduces credible evidence with respect to any factual

issue relevant to ascertaining the proper tax liability, section

7491 places the burden of proof on the Commissioner.       Sec.

7491(a)(1); Rule 142(a)(2).    Credible evidence is “‘the quality

of evidence which, after critical analysis, * * * [a] court would

find sufficient * * * to base a decision on the issue if no

contrary evidence were submitted’”.3       Baker v. Commissioner, 122

T.C. 143, 168 (2004) (quoting Higbee v. Commissioner, 116 T.C.

438, 442 (2001)).    Section 7491(a)(1) applies only if the

taxpayer complies with substantiation requirements, maintains all

required records, and cooperates with reasonable requests by the

Commissioner for witnesses, information, documents, meetings, and

interviews.   Sec. 7491(a)(2).   Although neither party alleges the

applicability of section 7491(a), we conclude that the burden of




     3
      We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
evidence the Court would find sufficient upon which to base a
decision on the issue in favor of the taxpayer. See Bernardo v.
Commissioner, T.C. Memo. 2004-199.
                                - 6 -

proof has not shifted to respondent with respect to the issue in

the present case.

     Moreover, deductions are a matter of legislative grace and

are allowed only as specifically provided by statute.    INDOPCO,

Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice

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

     Section 151(a) authorizes deductions for the exemptions

provided by that section.   In particular, section 151(c)(1)

provides an exemption for each of a taxpayer’s dependents, as

defined in section 152, who is a child of the taxpayer and who

has not reached the age of 19 by the close of the taxable year.

Sec. 151(c)(1)(B).

     Section 152(a)(1) defines the term “dependent” to include a

taxpayer’s child, provided that more than half of the child’s

support was received from the taxpayer or is treated under

section 152(e) as received from the taxpayer.

     In the case of a child of divorced parents, section

152(e)(1) provides as a general rule that the child shall be

treated as receiving over half of his or her support from the

custodial parent.    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.   In the event of

so-called split or joint custody, “‘custody’ will be deemed to be

with the parent who, as between both parents, has the physical
                               - 7 -

custody of the child for the greater portion of the calendar

year.”   Id.

     Thus, in the present case, because the separation agreement

established that Ms. Wood was the primary residential custodian

of JW throughout 2002, and because petitioner has testified that

JW resided with Ms. Wood for the greater portion of the calendar

year 2002, Ms. Wood was the custodial parent in 2002, and

petitioner was the noncustodial parent.

     Section 152(e)(2) provides an exception to the general rule

of section 152(e)(1).   Pursuant to that exception, the child

shall be treated as receiving more than half of his or her

support 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.

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

Reg. 34459 (Aug. 31, 1984).

     The declaration required by section 152(e)(2)(A) must be

made either on Form 8332 or on a statement conforming to the

substance of that form.   Id.; accord Miller v. Commissioner, 114

T.C. 184, 189 (2000), affd. sub nom. Lovejoy v. Commissioner, 293

F.3d 1208 (10th Cir. 2002).   The form provided by the IRS, Form
                               - 8 -

8332, calls for the following information: (1) The name of the

child or children for whom an exemption claim is released; (2)

the applicable tax year or years for which the claims are

released; (3) the custodial parent’s signature and the date of

signature; (4) the custodial parent’s Social Security number; (5)

the noncustodial parent’s name; and (6) the noncustodial parent’s

Social Security number.   “The exemption may be released for a

single year, for a number of specified years (for example,

alternate years), or for all future years, as specified in the

declaration.”   Sec. 1.152-4T(a), Q&A-4, Temporary Income Tax

Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984).

     In the present case, Ms. Wood, as the custodial parent, did

not sign a Form 8332 or any written declaration or statement

agreeing not to claim the exemption for JW, and no such form,

declaration, or statement was attached to petitioners’ return for

the year in issue.

     However, petitioner argues that he provided approximately 86

percent of JW’s support for taxable year 2002, and therefore he

should be entitled to claim the exemption with respect to JW.

Petitioner may have provided 86 percent of JW’s support for

taxable year 2002; however, such a fact does not suffice to

change the express requirements of section 152(e)(2).   See Miller

v. Commissioner, supra at 196, where this Court stated:

     The control over a child’s dependency exemption conferred on
     the custodial parent by section 152(e)(2) was intended by
                                - 9 -

     Congress to simplify the process of determining who is
     entitled to claim dependency exemptions for children of a
     marriage. See H. Rept. 98-432 (Part 2), at 1498 (1984). To
     make section 152(e)(2) work as intended, that control must
     be preserved by insisting on adherence to the requirements
     of section 152(e)(2) * * *

     The law is clear that petitioners are entitled to the child

dependency exemption for JW in 2002 only if they have complied

with the provisions of section 152(e)(2).      Petitioners have

failed in this regard.    It follows, therefore, that the exception

set forth in section 152(e)(2) does not apply and that the

general rule of section 152(e)(1) does apply.      Accordingly,

petitioners are not entitled to deduct the dependency exemption

deduction for JW for taxable year 2002.      Sec. 152(e)(1); Miller

v. Commissioner, supra.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                        Decision will be entered

                                for respondent.
