                    T.C. Summary Opinion 2010-108



                        UNITED STATES TAX COURT



                ALLISON LEA MULLINS, Petitioner,
             AND BILLY CRAIG MULLINS, Intervenor v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16987-08S.              Filed August 2, 2010.



     Allison Lea Mullins, pro se.

     Billy Craig Mullins, pro se.

     Timothy S. Sinnott, for respondent.



     RUWE, 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




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

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

shall not be treated as precedent for any other case.

     Respondent determined a $2,990 deficiency in petitioner’s

2006 Federal income tax.   The issues for decision are:

     (1) Whether petitioner is entitled to dependency exemption

deductions claimed for intervenor’s children for the 2006 tax

year;

     (2) whether petitioner is entitled to child tax credits for

2006 with respect to intervenor’s children; and

     (3) whether petitioner is entitled to relief from joint and

several liability under section 6015(b), (c), or (f) for the

deficiency as determined by respondent.

                            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 the petition was filed, petitioner resided in

Indiana and intervenor resided in Kentucky.    Petitioner and

intervenor were married in July 2003 and separated in March 2007.

Before they separated petitioner and intervenor filed a joint

Federal income tax return for the 2006 tax year.    Petitioner and

intervenor were divorced as of May 25, 2007.    The parties’

settlement agreement and decree of dissolution of marriage does
                               - 3 -

not contain any provisions regarding which of the parties is

liable for payment of the proposed deficiency for 2006.

     Before May 23, 2003, intervenor had been married to Sandra

M. Mullins, with whom intervenor had two children, hereinafter

referred to as J.C.M. and S.L.M.2   The dissolution of marriage

contract and agreement between intervenor and Sandra M. Mullins

provided that intervenor would have the right to claim J.C.M.,

but not S.L.M., as a dependent for Federal income tax purposes

for all years beginning in 2003, provided that intervenor

remained current in satisfying his child support obligation.

     In addition to his children with Sandra M. Mullins,

intervenor also had a child, hereinafter referred to as E.M.E.M.,

with Monica Gail Ely.   Pursuant to an Indiana court order (court

order) dated May 17, 2002, intervenor was given the right to

claim E.M.E.M. as a dependent on his Federal income tax return

for 2000, and for all future even-numbered years, provided that

he and Ms. Ely executed all documents necessary in order to

effectuate the income tax provisions provided in the court order.

     Petitioner prepared a joint 2006 Federal income tax return

on behalf of herself and intervenor.   On the return petitioner

and intervenor claimed dependency exemption deductions for J.C.M.

and E.M.E.M.   In addition, petitioner and intervenor claimed



     2
      The Court refers to minor children by their initials.     See
Rule 27(a)(3).
                               - 4 -

child tax credits for both children.   Petitioner and intervenor

failed to include Form 8332, Release of Claim to Exemption for

Child of Divorced or Separated Parents, with respect to either

J.C.M. or E.M.E.M. when the return was filed.

     On the joint return petitioner and intervenor reported an

overpayment of $3,469 in their Federal income tax.   Upon

issuance, the refund of the claimed overpayment was reduced by

$1,022.18 in order to satisfy a child support obligation of

intervenor.   The balance of the overpayment was directly

deposited into petitioner’s personal savings account on March 16,

2007, just 2 days before petitioner and intervenor separated.

     During the 2006 tax year petitioner and intervenor earned

wages of $24,914.67 and $8,948.75, respectively; i.e., $33,863.42

in combined wages.   In addition to these wages intervenor

received unemployment benefits totaling $13,579.   On the 2006

return petitioner and intervenor reported the wages and

unemployment benefits and claimed dependency exemptions for

themselves, J.C.M., and E.M.E.M.

     Petitioner attached to the return a Form 8379, Injured

Spouse Allocation, listing herself as the injured spouse.    On the

Form 8379 petitioner allocated all the wages and unemployment

compensation received by petitioner and intervenor to herself.

Petitioner attached Form 8379 because she was aware that

intervenor was in arrears on his child support obligations.
                               - 5 -

     During the 2006 tax year petitioner maintained a checking

account and a savings account in her name alone.    Expenses were

paid out of those accounts, as the intervenor maintained no

accounts of his own.   Petitioner has remarried and her current

surname is Brassfield.

                           Discussion

     Generally, the Commissioner’s determination in the notice of

deficiency is presumed correct, and the taxpayer bears the burden

of proving error in the Commissioner’s determinations.     Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).      Under

section 7491(a), the burden of proof with respect to any factual

issue shifts to the Commissioner if the taxpayer introduces

credible evidence with respect to that issue.   Rule 142(a)(2).

Petitioner has neither claimed nor shown eligibility for a shift

in the burden of proof.

I.   Dependency Exemption Deductions

      Generally, a taxpayer may claim dependency exemption

deductions for all individuals who are dependents of the taxpayer

for the tax year.   Sec. 151(a), (c).   “Dependent” is defined by

section 152(a) as including “a qualifying child”.   Sec.

152(a)(1).   In order to be a qualifying child, the child must

share the same principal place of abode as the taxpayer for more

than one-half of the taxable year at issue.   Sec. 152(c)(1).
                                 - 6 -

     Petitioner and intervenor did not have custody of J.C.M. and

E.M.E.M., nor did they share an abode with them for more than

one-half of the 2006 tax year.    The record shows that Sandra

Mullins and Ms. Ely had custody of their respective children.    As

a result, intervenor was the noncustodial parent of both J.C.M.

and E.M.E.M.

     Where there are divorced or separated parents, special rules

may determine which parent may claim a dependency exemption

deduction for a dependent child.    Section 152(e) specifies how to

determine the dependent status of children of divorced parents.

Section 152(e)(1) applies if a child receives more than one-half

of his support from his parents; the parents are divorced,

separated, or live apart; and the parents have custody of the

child for more than one-half of the tax year.

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

custodial parent may claim the exemption, unless all of the

criteria for one of the exceptions in section 152(e) are met.

The only exception relevant here is section 152(e)(2), which

provides that the noncustodial parent may claim the dependency

exemption deduction for a calendar year if 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 the child as a dependent for the taxable
                                - 7 -

year, and the noncustodial parent attaches the declaration to his

return for the taxable year.

     The regulations in effect for the 2006 tax year specify that

the declaration required under section 152(e)(2) must be made

either on a completed Form 8332 or on a statement conforming to

the substance of Form 8332.    Sec. 1.152-4T(a), Q&A-3, Temporary

Income Tax Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984).    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.   Himes v. Commissioner, T.C. Memo. 2010-97.

     Because intervenor was the noncustodial parent for both

J.C.M. and E.M.E.M., petitioner and intervenor were required to

attach for each child either an executed Form 8332 or a statement

conforming to its substance to their 2006 return in order to

claim the dependency exemption deductions.   See sec. 152(e).

Petitioner and intervenor failed to attach Forms 8332.

     The dissolution of marriage contract and agreement and the

court order, pertaining respectively to J.C.M. and E.M.E.M., had

they been attached to the return would not have constituted

statements that sufficiently conformed to the substance of Form
                                 - 8 -

8332.     We have held that a divorce decree that unambiguously

releases the dependency exemption to the noncustodial parent and

is signed by the custodial parent can conform in substance to

Form 8332.     Boltinghouse v. Commissioner, T.C. Memo. 2003-134.

In contrast, an ambiguous or contingent release of the dependency

exemption cannot conform in substance to Form 8332.         Thomas v.

Commissioner, T.C. Memo. 2010-11.     As a result, the dissolution

of marriage contract and agreement does not conform to the

substance of Form 8332, as its release of the dependency

exemption deduction for J.C.M. is conditioned upon intervenor’s

remaining current on his child support obligations for the year.3

See Thomas v. Commissioner, supra.

        The court order pertaining to E.M.E.M. also fails to

substantially conform to the substance of Form 8332.        Any

document must satisfy the signature requirement of section

152(e)(2) in order for that document to qualify as a statement

conforming to the substance of Form 8332.       Miller v.

Commissioner, 114 T.C. 184 (2000).       Because the court order is

not signed by the custodial parent, it fails to conform to the

substance of Form 8332.



     3
      Intervenor’s testimony at trial indicated that he believed
he was behind on child support payments for both J.C.M. and
E.M.E.M. for the 2006 tax year. Additionally, $1,022.18 of
petitioner and intervenor’s claimed income tax overpayment refund
for 2006 was offset against child support obligations of
intervenor.
                                  - 9 -

       Because Forms 8332 were not attached to the 2006 Federal

income tax return petitioner filed, this Court sustains

respondent’s determination with respect to the dependency

exemption deductions.

II.    Child Tax Credits

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

each qualifying child of the taxpayer.    “Qualifying child”, for

purposes of the child tax credit, means a qualifying child as

defined in section 152(c) who has not yet attained age 17.    Sec.

24(c).    In addition, a child for whom the requirements of section

152(e)(2) are met is treated as a qualifying child of the

taxpayer.    Sec. 152(e)(1)(B).

       Because J.C.M. and E.M.E.M. were not qualifying children

under section 152(c), and the requirements for the exception in

section 152(e)(2) were not satisfied, the children do not satisfy

the “qualifying child” requirement of the child tax credit under

section 24.    Thomas v. Commissioner, supra; Walker v.

Commissioner, T.C. Memo. 2008-194.

III.    Innocent Spouse Relief

       Section 6013(d)(3) generally provides that married couples

who file a joint income tax return are jointly and severally

liable for any resulting income tax liability.    A spouse may seek

relief from joint and several liability under section 6015 in
                              - 10 -

appropriate circumstances.   Sec. 6015(b), (c), and (f); Olson v.

Commissioner, T.C. Memo. 2009-294.

     A.   Section 6015(b)

     Section 6015(b)(1) authorizes the Commissioner to grant

relief from joint and several liability for tax if the taxpayer

requesting relief satisfies each of the following five

requirements:   (A) A joint return has been made for a taxable

year; (B) on such return there is an understatement of tax

attributable to erroneous items of one individual filing the

joint return; (C) the other individual filing the joint return

establishes that in signing the return he or she did not know,

and had no reason to know, that there was such understatement;

(D) taking into account all the facts and circumstances, it is

inequitable to hold the other individual liable for the

deficiency attributable to such understatement; and (E) the other

individual elects the benefits of this subsection not later than

the date which is 2 years after the date the Secretary has begun

collection activities with respect to the individual making the

election.

     The spouse requesting relief bears the burden of proving

that she satisfies each of these five requirements.    See Rule

142(a); Haltom v. Commissioner, T.C. Memo. 2005-209.     “The

requirements of section 6015(b)(1) are stated in the conjunctive.

Accordingly, a failure to meet any one of them prevents a
                               - 11 -

requesting spouse from qualifying for relief offered therein.”

Alt v. Commissioner, 119 T.C. 306, 313 (2002), affd. 101 Fed.

Appx. 34 (6th Cir. 2004); Haltom v. Commissioner, supra.

     Respondent does not dispute that petitioner satisfies the

elements of section 6015(b)(1) regarding the filing of a joint

return, the attribution of an understatement of tax to an

erroneous item of the nonrequesting spouse, and timely election,

under section 6015(b)(1)(A), (B), and (E), respectively.4

However, respondent contends that petitioner does not satisfy the

remaining two requirements of section 6015(b)(1)(C) and (D).

     A requesting spouse has knowledge or reason to know of an

understatement if she actually knew of the understatement or if a

reasonable person in similar circumstances, at the time she

signed the return, could be expected to know that the return

contained an understatement.   Sec. 1.6015-2(c), Income Tax Regs.

All of the facts and circumstances are considered in determining

whether a requesting spouse had reason to know of an

understatement.   Id.

     In the case before us, the deficiency is based upon

improperly claimed dependency exemption deductions and child tax

credits on petitioner and intervenor’s 2006 Federal income tax

return.   Petitioner personally prepared that return and failed to


     4
      Respondent, through his pretrial memorandum, concedes that
petitioner has satisfied the elements of sec. 6015(b)(1)(A), (B),
and (E).
                              - 12 -

attach to it either a Form 8332 or a document of a substanitally

similar character, as is required to be eligible for the

dependency exemption deduction.   She was aware that the Form 8332

was not attached, and she knew or should have known that because

of this omission, she and intervenor were not eligible to claim

the dependency exemption deductions.   Additionally, the fact that

petitioner knew intervenor was behind on his child support

obligations further indicates that she knew that he was not

eligible to claim the children as dependents, as his right to the

deduction was expressly conditioned on his fulfilling his child

support obligation.

     We find that petitioner has failed to satisfy the

requirements of section 6015(b)(1)(C) because she knew or had

reason to know that she was not justified in claiming the

deductions and credits related to intervenor’s children on their

return.

     Under section 6015(b)(1)(D), petitioner also has to

establish that taking into account all the facts and

circumstances, it would be inequitable to hold her liable for the

deficiency in tax for 2006.   See Doyle v. Commissioner, T.C.

Memo. 2003-96, affd. 94 Fed. Appx. 949 (3d Cir. 2004).     All of

the facts and circumstances are considered in determining whether

it is inequitable to hold a requesting spouse jointly and

severally liable for an understatement.   Sec. 1.6015-2(d), Income
                              - 13 -

Tax Regs.   Relevant factors include whether there was any

participation in wrongdoing on the part of the requesting spouse.

Doyle v. Commissioner, supra; sec. 1.6015-2(d), Income Tax Regs.

Petitioner prepared the return on which she claimed the

disallowed deductions and credits and thereby actually

participated in the action that led to the deficiency.    The fact

that petitioner was responsible for the events leading to the

deficiency further indicates that she has not satisfied the

requirements of section 6015(b) and is not eligible for relief

thereunder.

     B.     Section 6015(c)

      Under section 6015(c) if the requesting spouse is no longer

married to or is legally separated from the spouse with whom she

filed the joint return, she may elect to limit her liability for

a deficiency as provided in section 6015(d).     DeMattos v.

Commissioner, T.C. Memo. 2010-110.     However, the election is not

available where the Secretary has demonstrated that the

individual making the election had actual knowledge, at the time

the individual signed the return, of the item giving rise to the

deficiency.   Sec. 6015(c)(3)(C).   In accordance with our findings

above we find that the fact that petitioner prepared and filed

the return herself while failing to attach a Form 8332 or a

document of substantially similar character shows that petitioner

had actual knowledge of the items giving rise to the deficiency
                                - 14 -

and thereby prevents her from obtaining relief under section

6015(c).

     C.    Section 6015(f)

     Section 6015(f) allows for an alternative means of relief

for a requesting spouse who does not otherwise qualify for relief

under section 6015(b) or (c).    Sec. 6015(f)(2).   Section 6015(f)

permits relief from joint and several liability where it would be

inequitable to hold the individual liable for any unpaid tax or

any deficiency.   Sec. 6015(f)(1).   Under section 6015(f), the

Secretary may grant equitable relief to a requesting spouse on

the basis of the facts and circumstances of their case.    Sec.

6015(f)(1).

     The Commissioner has prescribed revenue procedure guidelines

to be used by Internal Revenue Service (IRS) employees in

determining whether a requesting spouse is entitled to relief

from joint and several liability under section 6015(f).    Rev.

Proc. 2003-61, 2003-2 C.B. 296.    Rev. Proc. 2003-61, supra, lists

the factors that IRS employees are to consider, and the Court

consults those same factors when reviewing a denial of relief by

the IRS.   DeMattos v. Commissioner, supra.

     Respondent concedes that petitioner satisfies the threshold

requirements of Rev. Proc. 2003-61, sec. 4.01, 2003-2 C.B. at
                              - 15 -

297,5 which must be satisfied in order for petitioner to be

eligible to submit a request for equitable relief under section

6015(f).

     Rev. Proc. 2003-61, sec. 4.03, 2003-2 C.B. at 298-299,

provides factors to be considered in determining whether relief

should be granted to a taxpayer who has satisfied the threshold

requirements of Rev. Proc. 2003-61, sec. 4.01 but does not

qualify for relief under Rev. Proc. 2003-61, sec. 4.02, 2003-2

C.B. at 298.   These factors include:   (1) Marital status; (2)

economic hardship; (3) knowledge or reason to know; (4)

nonrequesting spouse’s legal obligation; (5) significant benefit;

and (6) compliance with income tax laws.    Id. sec. 4.03(2)(a),

2003-2 C.B. at 298-299.

     Respondent concedes that petitioner is divorced (factor 1),

that she did not receive a significant benefit from the claimed

dependency exemption deductions (factor 5), and that she has been

in compliance with Federal income tax laws for subsequent years

(factor 6).6   Therefore, we find that these factors weigh in

favor of relief.   We will now examine the remaining factors.




     5
      Respondent, through his pretrial memorandum, concedes that
petitioner satisfies the requirements of Rev. Proc. 2003-61, sec.
4.01, 2003-2 C.B. 296, 297.
     6
      Respondent’s concessions regarding Rev. Proc. 2003-61, sec.
4.03, 2003-2 C.B. at 298, are also taken from respondent’s
pretrial memorandum.
                                 - 16 -

Factor 2:    Economic Hardship

     The record regarding the level of hardship petitioner would

face is limited.    Because she is employed and has failed to show

the Court what her expenses are, we find that petitioner has not

proven economic hardship.    This factor weighs against relief.

Factor 3:    Knowledge or Reason To Know

     Because we have already found that petitioner had knowledge

of the deductions and credits giving rise to the deficiency, we

find that this factor weighs against relief.

Factor 4:    Nonrequesting Spouse’s Legal Obligation

     Because under the divorce decree neither party has an

obligation to pay the deficiency, we find that this factor is

neutral.

Conclusion

     Of the factors discussed, three of them support relief

(marital status, lack of significant benefit, and compliance with

income tax laws), two factors weigh against relief (knowledge or

reason to know, and economic hardship), and one factor is neutral

(nonrequesting spouse’s legal obligation).

     Rev. Proc. 2003-61, sec. 4.03(2)(a)(iii)(B), 2003-2 C.B. at

298, provides that in a deficiency case, reason to know of the

item giving rise to the deficiency will not be given more weight

than other factors; however, actual knowledge of the item will

weigh heavily against relief being granted.
                               - 17 -

     We find that the factors supporting relief are outweighed by

petitioner’s actual knowledge of items giving rise to the

deficiency, including her preparation of the tax return and her

failure to include appropriate supporting documentation for the

deductions and credits claimed.

     On the basis of the foregoing, we hold that petitioner has

failed to carry her burden of showing that she is entitled to

relief from joint and several liability under section 6015(f) for

2006.

        To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.
