                     T.C. Summary Opinion 2010-75


                       UNITED STATES TAX COURT



         GREGORY J. AND SUSANNA M. CLINTON, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 2759-08S.               Filed June 16, 2010.



     Gregory J. and Susanna M. Clinton, pro se.

     Christina L. Lewerenz, for respondent.



     PARIS, Judge:    This case was heard pursuant to section 74631

of the Internal Revenue Code in effect when the petition was

filed.   Pursuant to section 7463(b), the decision to be entered

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

be treated as precedent for any other case.


     1
      Subsequent section references are to the Internal Revenue
Code of 1986, as amended and in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure, unless otherwise indicated.
                               - 2 -

     Respondent determined a deficiency of $4,684 in petitioners’

Federal income tax for 2006.   After concessions, the issue for

decision is whether petitioners are entitled to a dependency

exemption deduction and a child tax credit for petitioner Gregory

J. Clinton’s (petitioner) daughter, JC,2 from a former marriage

under sections 151 and 24, respectively.

                            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

Nebraska at the time the petition was filed.

     Before his marriage to Susanna M. Clinton (Mrs. Clinton),

petitioner was previously married.     Petitioner and his former

wife had two children:   JC, born in 1990, and HC, born in 1993.

     On May 30, 1996, petitioner and his former wife divorced.

The District Court of Douglas County, Nebraska, granted a decree

of dissolution of marriage (divorce decree) awarding custody of

both children to petitioner’s former wife.     Petitioner was

awarded visitation rights and ordered to make monthly child

support payments for support of the minor children.     The divorce

decree specified that petitioner was entitled to claim a

dependency exemption deduction for JC on his Federal and State



     2
      This Court refers to minor children by their initials per
Rule 27(a)(3).
                               - 3 -

income tax returns for every tax year during which he had

completed all child support payments by December 31 of that tax

year.   Additionally, “As long as * * * [petitioner] satisfies the

child support payment condition, * * * [his former wife] shall

execute IRS Form 8332 granting the tax exemption to * * *

[petitioner] for that tax year.”   The divorce decree was approved

as to both form and content and signed by both petitioner and his

former wife.

     In 1998 petitioner’s former wife moved with the two children

to Pennsylvania.   Petitioner contested this move, but eventually

the Supreme Court of Nebraska permitted it.   The move resulted in

a modification of the divorce decree that altered petitioner’s

visitation rights and child support obligations but did not

address tax exemptions.

     For several years following the divorce petitioner made all

child support payments, and his former wife executed a Form 8332,

Release of Claim to Exemption for Child of Divorced or Separated

Parents, releasing the exemption to petitioner.   Beginning in

2000, in response to a disagreement with petitioner over the

status of his child support payments, his former wife refused to

execute a Form 8332.   Petitioner returned to State court to

contest his former wife’s position, and the Nebraska court

resolved the dispute in favor of petitioner indicating all child
                               - 4 -

support obligations had been met.    Despite that, petitioner’s

former wife continued her refusal to execute a Form 8332.

     Petitioner made all child support payments for 2006.

Petitioner’s former wife refused to execute a Form 8332 for tax

year 2006.   Petitioner claimed a dependency exemption deduction

and a child tax credit for JC on his 2006 tax return and attached

to his return an incomplete Form 8332 (not signed by his former

wife) and a copy of the divorce decree.

     Petitioner’s former wife also claimed a dependency exemption

deduction and a child tax credit for JC on her 2006 tax return.

Petitioner’s former wife was the custodial parent of JC for 2006.

     In an attempt to enforce the divorce decree, petitioner

brought another suit against his former spouse in the District

Court of Douglas County, Nebraska.     In an order issued October 6,

2008, the district court found that:    (1) Petitioner was current

on his child support obligations for the 2003, 2006, and 2007 tax

years; (2) petitioner was entitled to the dependency exemption

deduction for the 2003, 2006, and 2007 tax years; and (3) his

former wife was not entitled to the dependency exemption

deduction for the 2003, 2006, and 2007 tax years.    Additionally,

the district court found petitioner’s former spouse in contempt

for failure to execute a Form 8332.    Petitioner was awarded a

judgment for attorney’s fees but was not awarded any other

damages.
                               - 5 -

                            Discussion

I. Dependency Exemption Deduction

     Section 151(c) allows taxpayers to deduct an exemption

amount for each individual who qualifies as a dependent as

defined in section 152.   Section 152 provides several definitions

for “dependent”, including that in section 152(e), which

specifies how to determine the dependency status of children of

divorced parents.   The exceptions of section 152(e)(1) apply if a

child receives more than half of her support from her parents,

the parents are divorced, and the parents have custody of the

child for more than half of the tax year.

     If the requirements of section 152(e)(1) are met, the

custodial parent may claim the exemption unless the criteria for

one of the section 152(e) exceptions have been met.   The only

relevant exception is section 152(e)(2), which provides that the

noncustodial parent may claim the dependency exemption deduction

for a calendar year only 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.

The regulations in effect for 2006 specify that the declaration

required under section 152(e)(2) must be made either on a
                               - 6 -

completed Form 8332 or on a statement conforming to the substance

of Form 8332.   See sec. 1.152-4T(a), Q&A-3, Temporary Income Tax

Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984).3   Form 8332 requires a

taxpayer to furnish (1) the names of the children for whom

exemption claims were released, (2) the years for which the

claims were released, (3) the signature of the custodial parent,

(4) the date of the custodial parent’s signature, (5) the name of

the noncustodial parent claiming the exemption, and (6) the

Social Security numbers for the custodial and noncustodial

parents.

     JC receives support exclusively from her divorced parents,

petitioner and his former wife.   JC primarily resided with

petitioner’s former wife, and neither party contests that

petitioner’s former wife was the custodial parent for JC in 2006.

Following the close of 2006 petitioner asked his former wife to

execute a Form 8332 releasing the deduction for JC to him in

accordance with their divorce decree, and his former wife refused

this request.   Petitioner subsequently attached an incomplete

Form 8332 (lacking his former wife’s signature) and a copy of his

divorce decree to his 2006 tax return.   Because petitioner failed

to attach a completed Form 8332 to his tax return, this Court



     3
      The Court notes that temporary regulations have binding
effect and are entitled to the same weight as final regulations.
See Peterson Marital Trust v. Commissioner, 102 T.C. 790, 797
(1994), affd. 78 F.3d 795 (2d Cir. 1996).
                                - 7 -

must determine whether the copy of his divorce decree is a

statement conforming to the substance of Form 8332 as the

legislature intended.   This Court holds that it is not.

     The divorce decree, providing a contingent release of the

dependency exemption to petitioner alone, cannot serve as a

release of the dependency exemption signed by his former wife as

required by section 152(e).    A divorce decree that unambiguously

releases the dependency exemption to the noncustodial parent and

is signed by the custodial parent conforms in substance to Form

8332.   See Boltinghouse v. Commissioner, T.C. Memo. 2003-134; cf.

Miller v. Commissioner, 114 T.C. 184 (2000) (signature of

attorney on divorce decree was insufficient to meet statutory

requirement of signature of custodial parent), affd. on other

grounds sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th

Cir. 2002).   In Miller v. Commissioner, supra at 192-193, this

Court rejected the use of a divorce decree that was signed by the

custodial parent’s attorney subject to a qualification that his

signature indicated he approved only the document’s form.

However, petitioner’s former wife signed the divorce decree

herself specifically approving the decree as to both form and

content, dated May 30, 1996.   As the Court noted in Miller, it is

the actual signature of the spouse that is necessary to meet the

requirements of section 152(e).   See id. at 190-191.
                               - 8 -

Petitioner’s divorce decree met the requirement for having the

signature of the custodial spouse.

     In addition to petitioner’s former wife’s signature, the

divorce decree explicitly states the name of the child for whom

the dependency exemption is released and the name of the

noncustodial parent (petitioner) to whom the exemption is

released.   These items are equivalent to the requirements on Form

8332.

     Despite the divorce decree’s inclusion of a valid signature

and appropriate identifying information, respondent argues that

the decree is insufficient to serve as a release of the exemption

because it does not specifically articulate the years for which

the exemption is released.   More specifically, the divorce decree

states that petitioner is entitled to claim the dependency

exemption only for years in which he is current on his child

support obligations by December 31 of that year, and the presence

of the condition prevents the divorce decree alone from

establishing that the deduction was released to petitioner for

the tax year at issue.   In prior cases, this Court has been

hesitant to validate the use of conditional releases in divorce

decrees because of a congressional intent to avoid support

payment disputes between spouses in the litigation of Federal tax

controversies.   See Thomas v. Commissioner, T.C. Memo. 2010-11

(rejecting the use of a divorce decree in part because the decree
                               - 9 -

specified necessary conditions that the Internal Revenue Service

(IRS) and this Court could not verify).   However, petitioner

argues that the conditional requirement in petitioner’s divorce

decree does not raise this policy concern because the Nebraska

courts have resolved the dispute between petitioner and his

former wife.

     To support his claim, petitioner submitted a court decree of

the district court of Douglas County, Nebraska.   That court

determined that:   (1) The court had full and complete

jurisdiction as to the parties and to the subject matter; (2)

petitioner had met his child support obligations for 2006; (3)

petitioner was entitled to the dependency exemption deduction for

JC for 2006; and (4) petitioner’s former wife was in contempt for

her failure to comply with the divorce decree and execute a Form

8332.

     State law governs the allocation of child custody and

marital property and determines the nature of these rights while

Federal law defines the appropriate tax treatment of those

rights.   See Knight v. Commissioner, 115 T.C. 506, 513 (2000);

Alpern v. Commissioner, T.C. Memo. 2000-246.    An allocation of

the dependency exemption deduction concerns the contractual

property right transferred to petitioner from his former wife

when she signed the divorce decree.    The Douglas County District

Court adjudicated the nature of this property right and found
                              - 10 -

that petitioner held that right for tax year 2006.   However, that

court’s decision was rendered on October 6, 2008, after

petitioners had filed their 2006 tax return.   Additionally, a

copy of the court order was not attached to petitioners’ Form

1040, U.S. Individual Income Tax Return, for tax year 2006.

Although the 2008 State court order ruling on the satisfaction of

all conditions in a divorce decree may be sufficient to render

the decree and order equivalent to a Form 8332, the language of

section 152(e)(2) in effect during the tax year at issue controls

and prohibits this Court from considering that court’s order,

because petitioner failed to attach it to his timely filed Form

1040 for the tax year 2006.

     Absent the Douglas County District Court order, the

conditional provisions of the petitioner’s divorce decree prevent

it from serving as a substantially equivalent release to a Form

8332.   Therefore, petitioners fail to meet the requirements of

section 152(e)(2) and are denied the dependency exemption

deduction.

     This Court notes that section 152(e)(2) provides a mechanism

for transferring the benefit of the dependency exemption

deduction from the custodial parent to the noncustodial parent

without involving the IRS in the resolution of disputes between

divorced parents.   See Bramante v. Commissioner, T.C. Memo. 2002-

228 (citing H. Rept. 98-432 (Part 2), at 1499 (1984)).     However,
                              - 11 -

this provision places the IRS in the midst of an ongoing dispute

between divorced parents every tax year or those years when the

noncustodial parent must procure a signed release from the

custodial parent.   Failure to obtain this release mandates that

the IRS deny the noncustodial parent the dependency exemption

deduction and support the custodial parent’s claim for the

deduction even if, as in this case, the custodial parent’s

refusal to sign the release is in violation of a State court

order.   Thus, both the statute and precedent provide custodial

parents both an effective mechanism and strong financial

incentive to violate the terms of their divorce decrees.

II. Child Tax Credit

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

for each qualifying child.   The qualifying child requirement is

satisfied if the taxpayer establishes entitlement to the

dependency exemption deduction under the exception of section

152(e)(2).   Walker v. Commissioner, T.C. Memo. 2008-194.    Because

petitioners failed to satisfy the requirements under section

152(e)(2), as discussed above, they are ineligible for the child

tax credit for JC in tax year 2006.

     To reflect the foregoing and the concessions of the parties,


                                           Decision will be entered

                                      under Rule 155.
