                   T.C. Summary Opinion 2007-5



                     UNITED STATES TAX COURT



               GEORGE RAY FLANIGAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 14996-05S.             Filed January 9, 2007.



     George Ray Flanigan, pro se.

     Joseph Ferrick, 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
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effect for the year at issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.

     Respondent determined a deficiency in petitioner’s Federal

income tax of $5,6371 for the taxable year 2003.   The issues for

decision are:   (1) Whether petitioner is entitled to the

dependency exemption deduction and (2) whether petitioner is

entitled to the child tax credit.

                            Background

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

The stipulation of facts and the attached exhibits are

incorporated herein by reference.   At the time that the petition

was filed, petitioner resided in Hanover Park, Illinois.

     Petitioner, an electrician, was employed by Littlefuse, Inc.

(Littlefuse) in Des Plaines, Illinois.   Petitioner received

compensation from Littlefuse in 2003 in the amount of $74,418.09.

     Petitioner was previously married to Margaret Flanigan (Ms.

Flanigan).   Two children were born of the marriage.   Petitioner’s

separation from Ms. Flanigan in October 2000 served as the

prelude to divorce proceedings.

     On or about May 29, 2001, an agreed order was entered in the

Circuit Court of Cook County, Illinois, to provide “unallocated



     1
       The new issues raised and the concession by respondent
reduces the deficiency from $5,637 to $2,725.
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family support” to Ms. Flanigan.   Specifically, the handwritten

court order provided:

     (1) George shall pay to Margaret, as for unallocated
     family support until further order of court or either
     one of them dies, 48% of George’s net income, the first
     payment shall be due on 6-14-01, subject to review and
     hearing. The issue of retroactivity to be reserved for
     trial. * * *

     On or about July 5, 2001, the Circuit Court of Cook County,

Illinois, issued a modification to its May 29, 2001, order.    The

court found petitioner’s net income to be approximately $895.41

per week.   Under the modified court order, petitioner was

required to pay $429.79 per week as “unallocated support.” Page 2

of the modified court order, however, provides that “[T]he amount

of child support cannot be expressed exclusively as a dollar

amount because all or a portion of the obligor’s income is

uncertain as to source, time of payment, or amount.”   The

modified order further states that child support payments would

be paid in an amount equal to 48% of petitioner’s net weekly

income (or $429.82).

     In addition to the child support payment, petitioner was

required to continue to pay medical and dental insurance for Ms.

Flanigan and the two children. Petitioner was also required to

maintain a $250,000 life insurance policy on himself, with Ms.

Flanigan as the beneficiary, at a cost to petitioner of $700 per

year.   The children, however, were not named as alternate income

beneficiaries.
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     A Notice to Withhold Income was issued to Littlefuse

requiring that it withhold $429.79 from petitioner’s weekly

paycheck and send the amount to the State Disbursement Unit.    A

Littlefuse payroll check dated December 31, 2003, for the pay

period ending December 28, 2003, shows that $429.79 was deducted

from petitioner’s wages for that pay period and that a total

amount of $22,778.87 was deducted and paid to the State

Disbursement Unit for that year.   The same payroll check shows

that Littlefuse deducted $43.27 weekly for medical insurance with

a total amount of $2,212.49 deducted for that year.   Similarly,

the same payroll check shows that Littlefuse deducted $4.16

weekly for dental insurance for that pay period with a total of

$213.05 deducted for that year.

     On or about April 19, 2004, petitioner and Ms. Flanigan

divorced.   Throughout the course of the divorce proceedings and

afterwards, Ms. Flanigan was the custodial parent, and petitioner

never had visitation rights.

     On his 2003 tax return, petitioner claimed a deduction of

$22,349 for alimony paid.   Petitioner further claimed dependency

exemptions for his two children as dependents as well as a child

tax credit of $1,000.

     Respondent issued the notice of deficiency in this case

disallowing only the alimony deduction.   In response, petitioner

filed his petition with the Court contesting the disallowance.
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      In an answer filed June 7, 2006, respondent conceded to

petitioner’s deduction of $22,349 as alimony for the “unallocated

family support payments.”    However, respondent raised new issues

by alleging that petitioner is not entitled to the two claimed

dependency exemption deductions and to the child tax credit.

                             Discussion

I.   Burden of Proof

      Generally, the burden of proof is on the taxpayer.   Rule

142(a)(1). Under section 7491, the burden of proof may shift to

the Commissioner if the taxpayer produces credible evidence with

respect to any factual issue relevant to ascertaining the

taxpayer’s liability.    Sec. 7491(a)(1).

      Where the Commissioner raises a new matter or claims an

increase in the deficiency, however, the burden of proof remains

upon the Commissioner.    Rule 142(a)(1); Achiro v. Commissioner,

77 T.C. 881, 889-890 (1981); Burris v. Commissioner, T.C. Memo.

2001-49; Jamerson v. Commissioner, T.C. Memo. 1986-302.

      Thus, the burden of proof is on respondent with respect to

the new issues raised in the answer filed with the Court (i.e.,

the dependency exemption deductions and the child tax credit).

Nonetheless, our findings and ultimate decision in this case are

based on a preponderance of the evidence.
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II.   Dependency Exemption Deduction

      In general, a taxpayer may be entitled to claim as a

deduction an exemption amount for each of his or her dependents.

Sec. 151(c).   An individual must meet the following five tests in

order to qualify as a dependent of the taxpayer:   (1) Support

test; (2) relationship or household test; (3) citizenship or

residency test; (4) gross income test; and (5) joint return test.

Secs. 151 and 152; Brissett v. Commissioner, T.C. Memo. 2003-310.

If the individual fails any of these tests, he or she does not

qualify as a dependent.

      With respect to the support test, a taxpayer generally must

provide more than half of a claimed dependent’s support for the

calendar year in which the taxable year of the taxpayer begins.

Sec. 152(a).   In the case of a child of legally separated

parents, if the child is in the custody of one or both of his

parents for more than half of the calendar year and receives more

than half his support during that year from his parents, such

child shall be treated, for purposes of section 152, as receiving

over half of his support during the calendar year from the parent

having custody for a greater portion of the calendar year (the

custodial parent).   Sec. 152(e)(1).   For this purpose, the word

“custody” as used in section 152(e) is defined in section 1.152-

4(b), Income Tax Regs., which provides:
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     “Custody,” for purposes of this section, will be
     determined by the terms of the most recent decree of
     divorce or separate maintenance, or subsequent custody
     decree, or, if none, a written separation agreement.
     In the event of so-called “split” custody, or if
     neither a decree or agreement establishes who has
     custody, * * * “custody” will be deemed to be with the
     parent who, as between both parents, has the physical
     custody of the child for the greater portion of the
     calendar year. [Sec. 1.152-4(b), Income Tax Regs.]

     A custodial parent may release claim to the exemption

pursuant to the provisions of section 152(e)(2), which provides:

          SEC. 152(e). Support Test in Case of Child of
     Divorced Parents, Etc.--

            *     *     *     *       *   *     *

          (2) Exception where custodial parent releases
     claim to exemption for the year.--A child * * * shall
     be treated as having received over 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.

          For purposes of this subsection, the term
     “noncustodial parent” means the parent who is not the
     custodial parent.

     The noncustodial parent is allowed a dependency exemption

deduction under section 152(e)(2) if, and only if, the custodial

parent signs a written declaration that such custodial parent
                               - 8 -

will not claim a child as a dependent, and the noncustodial

parent attaches such written declaration to the noncustodial

parent's income tax return for the taxable year.   Sec. 152(e)(2);

see also Miller v. Commissioner, 114 T.C. 184, 188-189 (2000),

affd. on another ground sub nom. Lovejoy v. Commissioner, 293

F.3d 1208 (10th Cir. 2002).

     The declaration required under section 152(e)(2) must be

made either on a completed Form 8332, Release of Claim to

Exemption for Child of Divorced or Separated Parents, or on a

statement conforming to the substance of Form 8332.     Miller v.

Commissioner, supra at 189; Brissett v. Commissioner, supra.

     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 the Social

Security number of the parent claiming the exemption.    Miller v.

Commissioner, supra at 190.   Thus, the exception granting the

noncustodial parent the dependency exemption deductions under

section 152(e) applies only if the custodial parent signs either

a Form 8332 or a written declaration conforming to the substance

of Form 8332.

     Ms. Flanigan, who was the custodial parent, did not sign any
                                 - 9 -

such written declaration.    Further, the record does not indicate

that petitioner obtained a Form 8332 from Ms. Flanigan.     At

trial, petitioner testified, with respect to Form 8332, that he

never signed or obtained such a form.     Because petitioner, the

noncustodial parent, did not meet the requirements of the

Internal Revenue Code, he cannot fall within the exception

provided in section 152(e)(2).    Since petitioner fails to meet

the requirements of the support test, the Court need not address

the other factors.    Accordingly, the Court holds that petitioner

is not entitled to dependency exemption deductions for his two

children for 2003.

III.    Child Tax Credit

       For 2003, petitioner claimed a child tax credit with respect

to his two children in the amount of $1,000.     Respondent asserts

that petitioner is not entitled to the child tax credit because

all of the unallocated family support payments that petitioner

made are alimony and not child support.     Petitioner argues that

the unallocated family support payments, as well as the expenses

for medical and dental insurance for the two children, entitle

him to the child tax credit.    We disagree.

       Section 24(a) authorizes a child tax credit with respect to

each qualifying child of the taxpayer.     The term “qualifying

child” is defined in section 24(c).      A “qualifying child” means

an individual with respect to whom the taxpayer is allowed a
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deduction under section 151, who has not attained the age of 17

as of the close of the taxable year, and who bears a relationship

to the taxpayer as prescribed by section 32(c)(3)(B).   Sec.

24(c)(1).

     Since petitioner is not allowed a deduction with respect to

his two children as dependents under section 151, it follows that

they are not qualifying children.   In the absence of a qualifying

child in 2003, and irrespective of whether the court-ordered

unallocated family support payments include child support as well

as the medical and dental insurance on behalf of the two minor

children, petitioner is not entitled to claim a child tax credit.

     Reviewed and adopted as the report of the Small Tax Case

Division.


                                          Decision will be entered

                                      under Rule 155.
