                    T.C. Summary Opinion 2010-16



                       UNITED STATES TAX COURT



         NORMA KAY LITTON a.k.a. CASEY LITTON, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3933-09S.               Filed February 22, 2010.



     Casey Litton, pro se.

     Brock E. Whalen, for respondent.



     DAWSON, Judge:   This case was heard pursuant to the

provisions of 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,



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

and this opinion shall not be treated as precedent for any other

case.

     Respondent determined a deficiency of $4,850 in petitioner’s

Federal income tax for 2006.   The issues for decision are:   (1)

Whether petitioner is entitled to dependency exemption deductions

for her son and daughter; (2) whether petitioner is entitled to

the child tax credit; and (3) whether petitioner is entitled to

head of household filing status.

                            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.

     At the time the petition was filed, petitioner resided in

Texas.

     Petitioner and Gregory Lee Litton (Mr. Litton) were married

in 1986.   They have two children, a son, M.C., who was born in

1992, and a daughter, J.K., who was born in 1995.2

     On March 13, 1997, petitioner and Mr. Litton were divorced

pursuant to a final decree of divorce (decree) entered by the

District Court of Williamson County, Texas.   The decree listed

Mr. Litton’s residence as the “present address” of the children.



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

The decree made no provision with respect to allocating

dependency exemption deductions for the children.

     The decree named petitioner and Mr. Litton as “Joint

Managing Conservators” of the children, but it provided that Mr.

Litton “shall have the exclusive right to determine the residence

and domicile of the children.”    The decree also provided that Mr.

Litton “shall have possession of the children at all times not

specifically awarded in this decree to NORMA KAY CASEY LITTON

(petitioner), or otherwise mutually agreed by the parties.”

     In a standard possession order, which was incorporated in

the decree, the district court set forth detailed guidelines

regarding “possession” of the children.   In particular, the

standard possession order provided that petitioner “shall have

possession of the child at any and all times mutually agreed to

in advance by the parties, and, failing mutual agreement,” shall

have the right to possession of the children as follows:

     1. On Tuesday and Thursday during the regular school
        term starting at 6:00 p.m. until the next morning;

     2. On the first, third, and fifth weekends of each
        month starting at 6:00 p.m. on Friday and ending on
        Sunday at 6:00 p.m. (This period of possession is
        extended by one day in the event that a school
        holiday falls on a Friday or Monday.)

     3. During the Christmas holiday in even-numbered years
        on the day that the child is dismissed from school
        for Christmas vacation and ending at noon on
        December 26;
                                - 4 -

     4. On Mother’s Day, if not otherwise entitled to
        possession, from 6:00 p.m. on the Friday preceding
        and ending at 6:00 p.m. on Mother’s Day;

     5. During spring break of even-numbered years beginning
        at 6:00 p.m. on the day that the child is dismissed
        from school and ending at 6:00 p.m. on the day
        before school resumes after that vacation; and

     6. For 30 days (consecutive or nonconnective depending
        upon whether petitioner gives advance notice by May
        1st to Mr. Litton) during summer vacation, subject
        to the right of Mr. Litton to have possession of the
        children for one weekend during this period.

     Mr. Litton was awarded possession of the children if not

otherwise entitled:

     1. On Thanksgiving in even-numbered years beginning at
        6:00 p.m. on the day the child is dismissed from
        school before Thanksgiving and ending at 6:00 p.m.
        on the following Sunday; and

     2. On Father’s Day beginning at 6:00 p.m. on the Friday
        preceding and ending at 6:00 p.m. on Father’s Day.

     On March 27, 2003, a final order in suit to modify parent-

child relationship (modification order) was entered.   The

modification order decreased petitioner’s child support

obligation from $650 to $200 per month but did not alter the

custody arrangement set forth in the decree.   The modification

order does show Mr. Litton’s address as being the children’s

residence.

     Petitioner and Mr. Litton observed the terms of the standard

possession order during 2006.   Each attempted to accommodate the

other’s reasonable requests, and they sometimes deviated from the

terms of that order upon their mutual agreement.   They also
                               - 5 -

agreed to allow the children to spend some Sunday nights at

petitioner’s home for the weekends that she had custody of the

children.

     Petitioner kept a detailed and contemporaneous calendar log

showing the days and nights the children were residing in her

custody during 2006.   Her custody records were more complete and

precise than those kept by Mr. Litton.

     In a letter dated April 30, 2006, and sent to Mr. Litton by

certified mail on May 1, 2006, petitioner stated:

     As suggested by federal judge Armen, in court on
     3/13/2006, I am enclosing a copy of tax form 8332,
     Release of Claim to Exemption for Child of Divorced or
     Separated Parents. Although the tax court ruled in
     favor of me claiming both of the children as
     deductions, I propose to you (again), that the fair
     solution, in the future, is for each of us to claim one
     child. Please sign this form and return it to me so
     that I have the documentation that we mutually agree to
     this solution.

     If you choose not to sign the form 8332 that allows you
     to claim M, I will exercise my right to have the
     children for an additional 30 days during summer months
     from now on, so that the support test is not questioned
     in the future and I will claim both children. I will
     also choose to fully abide by the letter of the divorce
     decree, changing our weekend and holiday arrangements
     so that we follow the possession guidelines as written.
     No questions asked.

     As per our divorce decree, I am notifying you that I
     plan to have the children for an extended period of
     summer possession from Saturday, July 1st, 2006 through
     Thursday, July 6th, and again from Monday, July 17th
     through Wednesday, August 9th, 2006. This is a total
     of 30 days.

     The first day of school, according to the Lander BEEN
     website, is Wednesday, August 17th, 2006.
                               - 6 -

      If you decide to sign the enclosed 8332, allowing you
      to claim M and me JK, I will consider renegotiating the
      above 30-day possession so that the children will not
      be away from you for the extended period of time during
      the summer.

      If you have further questions, feel free to respond.
      Please let me know your decision by May 15, 2006, so
      that arrangements for childcare can be made. If I do
      not hear from you by this date, I will proceed as per
      our divorce decree. Thank you in advance.

      Petitioner timely filed her 2006 Federal income tax return

using head of household filing status.    She claimed her son and

daughter as dependents for purposes of two dependency exemption

deductions and the child tax credit.

      On November 21, 2008, respondent sent petitioner a notice of

deficiency disallowing the two claimed dependency exemption

deductions for the children and the child tax credit and changing

her filing status from head of household to single.

                            Discussion3

I.   Dependency Exemption Deductions

      In general, a taxpayer may deduct an exemption for a

dependent, such as a taxpayer’s qualifying child.   Secs. 151(a),

(c), 152(a)(1).   An individual cannot be a dependent of more than

one taxpayer.   See sec. 151(d)(2).




      3
      We decide this case on the basis of the evidence in the
record without regard to the burden of proof. Accordingly, we
need not decide whether the general rule of sec. 7491(a)(1) is
applicable. See Higbee v. Commissioner, 116 T.C. 438 (2001).
                                 - 7 -

     Section 152(c)(1) defines a “qualifying child” as an

individual:

          (A) who bears a relationship to the taxpayer, such
     as a child of the taxpayer;

          (B) who    has the same principal place of abode as
     the taxpayer    for more than one-half of such taxable
     year; (aside    from special rules applicable to divorced
     or separated    parents);

          (C) who is under the age of 19 or is a student who
     has not attained the age of 24 as of the close of the
     calendar year; and

          (D) who has not provided over one-half of such
     individual’s own support for the calendar year in which
     the taxable year of the taxpayer begins.

     In pertinent part, section 152(e) provides:

            SEC. 152(e). Special Rule For Divorced Parents, Etc.--

                 (1) In general.--Notwithstanding subsection
            (c)(1)(B), (c)(4), or (d)(1)(C), if--

                      (A) a child receives over one-half of
                 the child’s support during the calendar year
                 from the child’s parents--

                            (i) who are divorced or legally
                       separated under a decree of divorce or
                       separate maintenance,

        *        *        *        *       *       *      *

                      (B) such child is in the custody of 1 or
                 both of the child’s parents for more than
                 one-half of the calendar year, such child
                 shall be treated as being the qualifying
                 child or qualifying relative of the
                 noncustodial parent for a calendar year if
                 the requirements described in paragraph (2)
                 or (3) are met.
                                 - 8 -

        *        *       *        *       *         *     *

                 (4) Custodial parent and noncustodial
            parent.--For purposes of this subsection--

                      (A) Custodial parent.--The term
                 “custodial parent” means the parent having
                 custody for the greater portion of the
                 calendar year.

                      (B) Noncustodial parent.--The term
                 “noncustodial parent” means the parent who is
                 not the custodial parent.

     Petitioner contends that she qualifies as the custodial

parent of the children for 2006 because they were in her custody

for the greater portion of that year, whether measured by the

number of nights, days, or hours they spent with her.    By

contrast, respondent, who has allowed the dependency exemption

deductions to Mr. Litton for 2006, contends that the children had

the same principal place of abode as Mr. Litton for more than

half of the year and were in his custody for the greater portion

of the year and therefore are not petitioner’s qualifying

children under section 152(c)(1).

     We agree with petitioner.    While the statutory provisions

here may seem somewhat convoluted and confusing, we think the

special provisions of section 152(e)(1) and (4) override the

general provision of section 152(c)(1)(B) where the dependency

exemption deduction for a “qualifying child” of divorced or

separated parents is involved.    Sec. 152(e)(1).
                               - 9 -

     In the case of a child of divorced parents, if a child

receives over half of his support during the year from both his

parents and is in the custody of one or both parents for more

than half of the year, then the child is treated as being the

qualifying child of the parent having custody for a greater

portion of the year.   Sec. 152(e)(1), (4)(A).   That parent is

referred to as the “custodial parent”.   If there is split or

divided joint 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.; see Bjelland v. Commissioner, T.C.

Memo. 2009-297; Maher v. Commissioner, T.C. Memo. 2003-85.

     The resolution of this issue turns on whether petitioner had

physical custody of the children for the greater portion of 2006.

See McCullar v. Commissioner, T.C. Memo. 2003-272.    In support of

her contention, petitioner relies on her detailed calendar log,

which she kept each day and which was admitted into evidence.      On

that calendar log she placed the notation “kids” on each day they

were in her custody and showed the hours and nights she had them.

We find that petitioner diligently documented the times she had

physical custody of her children in her daily calendar log, which

she kept on an accurately contemporaneous basis.    We were also

impressed with her candid and credible testimony.
                               - 10 -

       While there is no statutory yardstick to quantify custody in

this situation, we think the number of both days and nights

petitioner had custody of her children during the regular school

term was slightly more than those claimed by Mr. Litton in 2006.

What substantially tipped the custody scales in petitioner’s

favor was the 30-day period she had the children in her physical

custody during July and August.

       Accordingly, on the basis of this record, and in view of all

the facts and circumstances herein, we conclude that petitioner

qualified as the custodial parent of her children, who were in

her physical custody for the greater portion of 2006.     Therefore,

we hold that petitioner is entitled to the dependency exemption

deductions for her son and daughter in that year.

II.    Child Tax Credit

       Section 24(a) allows a child tax credit of $1,000 for each

qualifying child of the taxpayer.    The term “qualifying child”

means a qualifying child (as defined in section 152(c)) who has

not attained the age of 17.    Sec. 24(c)(1).   Because M.C. and

J.K. were petitioner’s qualifying children for 2006 and neither

had attained the age of 17 during that year, we hold that

petitioner is also entitled to the child tax credit.

III.    Head of Household Filing Status

       Section 1(b) applies an advantageous tax rate to the taxable

income of unmarried individuals who qualify as head of a
                              - 11 -

household.   Compare sec. 1(b) with sec. 1(c) (rate generally

applicable to taxable income of unmarried individuals).    Under

section 2(b)(1), the term “head of a household” includes an

individual unmarried at the end of the taxable year who, among

other things, maintains as his or her home a household which

constitutes for more than one-half of such taxable year the

principal place of abode, as a member of such household, of a

qualifying child.4   On the basis of the record, we conclude that

petitioner maintained a household which was the principal place

of abode of her children for more than half the year.    Therefore,

because M.C. and J.K. are petitioner’s qualifying children, we

hold that she is entitled to use the head of household filing

status for 2006.

     To reflect the foregoing,


                                      Decision will be entered for

                                 petitioner.




     4
      We note that a qualifying child for purposes of sec. 2(b)
is “determined without regard to section 152(e),” which suggests
that a custodial parent whose home is the principal place of
abode for the child for more than half the year is entitled to
head of household filing status even if he or she has released
his or her claim to the dependency exemption under sec.
152(e)(2).
