                  T.C. Summary Opinion 2006-56



                     UNITED STATES TAX COURT



                 NORMA K. LITTON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16080-05S.            Filed April 19, 2006.



     Norma K. Litton, pro se.

     Catherine S. Tyson, for respondent.



     ARMEN, Special Trial Judge:    This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time that the petition was filed.1   The decision to

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

should not be cited as authority.


     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 2003,
the taxable year in issue.
                                - 2 -

     Respondent determined a deficiency in petitioner’s Federal

income tax for the taxable year 2003 in the amount of $2,117.

     The issues for decision are:

     (1) Whether petitioner is entitled to dependency exemption

deductions for her son and daughter.       We hold that she is.

     (2) Whether petitioner is entitled to the child tax credit

in respect of her children.    We hold that she is.

                              Background

     Some of the facts have been stipulated, and they are so

found.   We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

     At the time that the petition was filed, petitioner resided

in Leander, Texas.

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

in 1986.   The couple have two children, a son, who was born in

1992, and a daughter, who was born in 1995.

     In March 1997, petitioner and Mr. Litton were divorced

pursuant to a decree entered by the district court of Williamson

County, Texas.   The divorce decree listed Mr. Litton’s residence

as the “present address” of each of the parties’ children.        The

divorce decree made no provision with respect to dependency

exemption deductions for the children.

     The divorce decree named petitioner and Mr. Litton as “Joint

Managing Conservators” of the parties’ children, but it provided
                              - 3 -

that Mr. Litton “shall have the exclusive right to determine the

residence and domicile of the children.”    The divorce 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 divorce 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, in pertinent part, as follows:2

     Weekends. On weekends, beginning at 6:00 P.M. on the
     first, third, and fifth Friday of each month and ending
     at 6:00 P.M. on the following Sunday.

     Weekend Possession Extended by a School Holiday.
     Except as otherwise explicitly provided in this
     Standard Possession Order, if a weekend period of


     2
        The Standard Possession Order also provided very specific
guidelines regulating custody on a child’s birthday, Mother’s
Day, Father’s Day, Thanksgiving, Christmas holidays, and so on
and so forth. At trial, petitioner and Mr. Litton focused almost
exclusively, if not exclusively, on the weekend and
Tuesday/Thursday provisions of the Standard Possession Order. On
the basis of the parties’ focus at trial, and judging from
petitioner’s day-planner, see infra, it would appear that they
generally treated just the weekend and Tuesday/Thursday
provisions as the operative provisions regarding which parent was
entitled to “possession” of the children at any particular time.
                                 - 4 -

     possession by Joint Managing Conservator, NORMA KAY
     CASEY LITTON, begins on a Friday that is a school
     holiday during the regular school term or a federal,
     state, or local holiday during the summer months when
     school is not in session, or if the period ends on or
     is immediately followed by a Monday that is such a
     holiday, that weekend period of possession shall begin
     at 6:00 P.M. on the Thursday immediately preceding the
     Friday school holiday or end at 6:00 P.M. on that
     Monday holiday or school holiday, as applicable.

     Tuesday and Thursday. On Tuesday and Thursday of each
     week during the regular school term, beginning at 6:00
     P.M., and ending at 8:00 A.M. the following morning.

     Generally speaking, petitioner and Mr. Litton faithfully

observed the terms of the Standard Possession Order during 2003.

Petitioner and Mr. Litton, however, each strove to accommodate

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

terms of that order upon their mutual agreement.   More

specifically, the parties frequently agreed to allow the children

to spend Sunday night at petitioner’s home for such weekends that

petitioner had custody of the children.3




     3
         Mr. Litton testified:

     Usually, if they spent the night it was for a birthday,
     * * * or there may have been some other such goings on.
     Maybe they had traveled to see their grandmother.
     There was some sort of activity that they were doing on
     a Sunday, which would not have them back in a
     reasonable amount of time. And I am not the kind of
     person who would say, you know, you have to be here at
     6:00 for me to pick you up. And so what would happen
     would be is, they would come back later after 6:00 in
     the evening, and they could spend the night. It is not
     an issue for me to have them spend the night there.
                                - 5 -

     The Standard Possession Order was in effect during the 2003

calendar year.    Petitioner and Mr. Litton together provided more

than half of the support for the children in 2003, and the

children were in the custody of both parents for more than half

of the year.

     Petitioner timely filed a Federal income tax return (Form

1040) for 2003.   On her return, petitioner claimed dependency

exemption deductions for her two children and the child tax

credit.

     In the notice of deficiency, respondent disallowed the

dependency exemption deductions “since another taxpayer has also

claimed this dependent on their tax return.”4   Respondent also

disallowed the child tax credit on the ground that petitioner was

not entitled to claim the children as dependents.

                             Discussion5

     A.   Dependency Exemption Deduction

     In general, a taxpayer may deduct an exemption for a

dependent, such as a taxpayer’s child, over half of whose support

is provided by the taxpayer.   Secs. 151(a), (c)(1), 152(a).   An


     4
        At trial, Mr. Litton testified that he claimed dependency
exemption deductions for his son and daughter on his 2003 return.
The record suggests that respondent did not challenge those
deductions.
     5
        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).
                               - 6 -

individual cannot be a dependent of more than one taxpayer.     See

sec. 151(d)(2).

     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 custody of one or both parents for more than

half of the year, then the child shall be treated as receiving

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

custody for a greater portion of the year.6   Sec. 152(e)(1).

That parent is referred to as the “custodial parent”.   Id.     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 custody of the child for the greater portion of the

calendar year.”   Sec. 1.152-4(b), Income Tax Regs.

     Petitioner contends that she is the custodial parent because

the children were in her custody for more than half of the year.

In contrast, respondent contends that Mr. Litton is the custodial

parent because the children were in his custody for more than

half of the year.   The resolution of this issue therefore turns



     6
        The exceptions to the general rule of sec. 152(e)(1) do
not apply to the facts of this case. For example, sec. 152(e)(2)
allows the noncustodial parent to claim the dependency exemption
deduction for a child if the custodial parent signs a written
declaration, or Form 8332, Release of Claim to Exemption for
Child of Divorced or Separated Parents, releasing his or her
claim to the deduction, and the noncustodial parent attaches the
declaration or Form 8332 to his or her tax return. In at least 1
year, which is not before the Court, Mr. Litton had signed a Form
8332.
                               - 7 -

on whether petitioner had physical custody of the children for

the greater portion of 2003.   See McCullar v. Commissioner, T.C.

Memo. 2003-272; sec. 1.152-4(b), Income Tax Regs.

     In support of her contention, petitioner relies on her day-

planner that was introduced into evidence.   In the day-planner,

petitioner placed a “K” (for “kids”) on each day that she had

custody of the children and then numbered each such mark

sequentially.   The day-planner contained 195 “K” marks.7

Petitioner therefore asserts that she had physical custody of the

children for 195 days in 2003, which is more than half of the

year.

     At the center of this dispute is how petitioner and Mr.

Litton quantified the time that the children spent with

petitioner.   In particular, how the parties quantified the Sunday

of the first, third, and fifth weekend.   Petitioner quantified

physical custody in terms of “days” that the children were in her

physical custody; that is, Tuesday, Thursday, and the first,

third, and fifth Friday, Saturday, and Sunday weekend.      Although

petitioner and Mr. Litton dispute whether the children spent the


     7
        At trial, petitioner testified that she had custody of
the children for “193 days” in 2003. In contrast, she wrote “196
days” in the margin of the day-planner as the total number of
custody days for 2003. We regard the inconsistences among her
custody totals as insignificant. After close inspection of the
day-planner, although it appears that petitioner miscounted one
day (i.e., Nov. 14 was marked as day 165 and Nov. 15 was marked
as day 167), there were a total of 195 “K” marks in the day-
planner.
                                - 8 -

respective Sunday night at her home, petitioner counted Sunday as

a full day that the children were in her physical custody.

Therefore, according to petitioner, the children spent 195 days

in her physical custody.

     There is no statutory yardstick to quantify physical custody

“for a greater portion” of the year, but such a yardstick is

determined by the facts of each individual case.    In the present

case, the Standard Possession Order awarded petitioner physical

custody during the regular school term every Tuesday and Thursday

beginning at 6 p.m. and ending at 8 a.m. the following morning.

With respect to the weekends, the Standard Possession Order

awarded petitioner custody beginning at 6 p.m. on the first,

third, and fifth Friday of each month and ending at 6 p.m. on the

following Sunday.   If Monday was a school holiday, petitioner’s

custody would end at 6 p.m. on that Monday.    In light of the fact

that the Standard Possession Order awarded physical custody to

each parent on the basis of an overnight stay, we find it

appropriate in this case to quantify physical custody on the

number of nights that the children spent with each parent.

     We found petitioner’s testimony at trial to be straight-

forward and credible, and she impressed us as a sincere and

conscientious taxpayer.    Moreover, we found that petitioner

diligently documented the time that she had physical custody of

the children in her day-planner, which she maintained on an
                              - 9 -

accurately contemporaneous basis.   Petitioner testified with

specificity as to the time that the children spent with her, and

Mr. Litton acknowledged that he and petitioner often mutually

agreed to deviate from the beginning and ending times set forth

in the Standard Possession Order.

     Petitioner and Mr. Litton do not dispute that the children

spent the night at petitioner’s home on Tuesdays, Thursdays, and

the respective Fridays and Saturdays, as well as on other days

mutually agreed upon between the parties.8   With respect to the

designated Sundays, the Standard Possession Order awarded

petitioner physical custody of the children until 6 p.m.    It

follows therefrom that the children would have spent the night at

Mr. Litton’s home on Sunday unless the parties mutually agreed

that the children would spent the night at petitioner’s home.

Indeed, it is apparent from the record that the parties

frequently agreed to allow the children to spend Sunday night

with petitioner when she had custody of them during the weekend.

     Petitioner asserts that the children spent the night at her

home for most, or for more than half, of the Sundays that she had

physical custody of them for the weekend.    Mr. Litton

acknowledged that the children spent the night at petitioner’s

home on Sunday for at least one-third of the time that she had



     8
        It appears that petitioner’s log contained notations for
such occasions, which were included in petitioner’s computation.
                              - 10 -

physical custody of them for the weekend.     Furthermore, Mr.

Litton testified that during the summer and other breaks when the

children did not have school on Monday, the children frequently

spent Sunday night with petitioner.

     The record establishes that the children spent 167 non-

Sunday nights with petitioner and sufficiently more than half of

the 28 Sunday nights for such weekends that petitioner had

physical custody of them to constitute more than half of the 365

nights of the year.   On balance, and in light of the facts and

circumstances of this case, we conclude that the children spent

more than 50 percent of the time with petitioner.     Therefore, we

hold under section 152(e)(1) that petitioner had physical custody

of the children for the greater portion of 2003.     Accordingly,

petitioner is entitled to dependency exemption deductions for her

son and daughter in the taxable year 2003.9    Respondent’s

determination on this issue is not sustained.


     9
        At trial, petitioner and Mr. Litton appeared to have a
civil relationship, and they seemed to cooperate well in respect
to deviating from the Standard Possession Order in the best
interests of the children. For future years, the parties
appeared to entertain the notion of properly completing and
executing a Form 8332 releasing one’s claim to the dependency
exemptions and perhaps to alternate every year, or to split the
dependency exemption deductions evenly between each parent each
year. If the respective party were to attach such form to his or
her return, then, at least for the taxable year or years subject
to such form, the parties might succeed in avoiding the issues
that have arisen in the present case. Otherwise, we foresee that
respondent may disallow the dependency exemption deductions to
both petitioner and Mr. Litton and require both of them to file
petitions in this Court for a determination of who had custody
for the greater portion of a particular taxable year.
                                - 11 -

     B.   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”.     Sec. 24(c)(1)(A).   For the reasons stated

above, petitioner may claim dependency exemption deductions for

her son and daughter under section 151, and, therefore, she may

claim a child tax credit.     Respondent’s determination on this

issue is not sustained.

     C.   Conclusion

     Reviewed and adopted as the report of the Small Tax Case

Division.

            To reflect the foregoing,



                                             Decision will be entered

                                        for petitioner.
