                  T.C. Summary Opinion 2002-145



                     UNITED STATES TAX COURT



                   VIRGIL CATO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 10753-01S.              Filed November 12, 2002.


     Andrew N. Gross, for petitioner.

     Pamela L. Mable, for respondent.



     DEAN, 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.    Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code in effect for the year in issue, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

The decision to be entered is not reviewable by any other court,

and this opinion should not be cited as authority.
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     Respondent determined a deficiency in petitioner’s Federal

income tax for 1998 of $1,752, and an addition to tax of $161.70

under section 6651(a)(1).   After trial, respondent filed a motion

to assert a claim for an increased deficiency.    This Court

granted respondent’s motion.   After concessions,1 the issues that

remain for decision are:    (1) Whether petitioner is entitled to

claim dependency exemption deductions; and (2) whether petitioner

is entitled to claim the child tax credit.

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

The stipulation of facts and the accompanying exhibits are

incorporated herein by reference.   At the time the petition was

filed, petitioner resided in Decatur, Georgia.

                             Background

     Petitioner married Lillian Cato in 1980.    During their

marriage they had three children, Shayla, and twins, Keith and

Kevin.   Petitioner and Ms. Cato divorced on August 12, 1992.     The

divorce decree states that Ms. Cato “shall be the custodian and

residential parent of the three-minor children”.    The divorce

decree also specifies that petitioner is responsible for child

support of $800 per month, maintaining dependent health




     1
       In the notice of deficiency respondent determined that
petitioner was not entitled to head of household filing status.
Petitioner concedes that he is not entitled to file as a head of
household and that he is liable for the addition to tax for
failure to file timely his Federal income tax return.
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insurance, and maintaining life insurance for the children’s

benefit.    Additionally, the decree established that

          For the tax year 1992, [petitioner] shall be
     entitled to take all three children as exemptions under
     his State and Federal filing. Each year thereafter,
     [petitioner] shall be entitled to the oldest child and
     one of the youngest children who are twins. These
     exemptions are strictly contingent upon [petitioner]
     paying and being current on all child support as
     previously set out herein.


     In 1998, the Superior Court of DeKalb County modified the

divorce decree by an Order for Child Support (child support

order).    The child support order entitled petitioner to claim

dependency exemptions for Shayla as a dependent on his State and

Federal tax returns for 1997 and 1998.    The court entered an

Income Deduction Order for petitioner to pay $500 towards his

child support arrearage.    The child support order further states

that any provision of the original divorce decree not

specifically modified in the child support order remains in full

force and effect.

     Petitioner filed his 1998 Federal income tax return as head

of household and reported income of $55,785.    Petitioner claimed

dependency exemption deductions for his daughter and his son

Kevin and two child tax credits.    Respondent issued a notice of

deficiency determining that petitioner is not entitled to head of

household filing status, the dependency exemption deduction for

his son Kevin, or the child tax credit because he failed to
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substantiate his claims.   Respondent has claimed an increased

deficiency in his answer alleging that petitioner is not entitled

to a dependency exemption deduction or a child tax credit for his

daughter.

                            Discussion

1.   Dependency Exemption Deductions2

      Section 151(c) allows a taxpayer to deduct an exemption

amount for each "dependent" as defined in section 152.   Section

152(a) defines a dependent to include a son or daughter of the

taxpayer, “over half of whose support, for the calendar year in

which the taxable year of the taxpayer begins, was received from

the taxpayer (or is treated under subsection (c) or (e) as

received from the taxpayer)”.

      In the case of a child of divorced parents, section

152(e)(1) provides that if a child receives over half of his

support from parents who are divorced under a decree of divorce

and the child is in the custody of one or both of his parents for

more than one-half of the year, then the child will be treated as

receiving over half of his support from the parent having custody

for a greater portion of the calendar year.   Section 1.152-4(b),

Income Tax Regs., provides that the term "custody" is "determined

by the terms of the most recent decree of divorce".   Because the


      2
       The Court decides this case without regard to the burden
of proof. Accordingly, the Court need not decide whether current
sec. 7491(a)(1) is applicable in this case. See Higbee v.
Commissioner, 116 T.C. 438 (2001).
                                 - 5 -

divorce decree grants Ms. Cato full custody of the three

children, she is considered their "custodial parent" under

section 152(e).     Cafarelli v. Commissioner, T.C. Memo. 1994-265.

      Petitioner contends that because he was in compliance with

the terms of the divorce decree, as modified by the child support

order, he is entitled to the claimed deductions.    Petitioner

claims that because he did not miss a monthly child support

payment in 1998 and he was current on his payments as required by

the child support order he is entitled to the deductions for

Shayla and Kevin.    The Court, however, need not discuss the

merits of this argument because petitioner, as the noncustodial

parent, did not abide by the statutory requirements as explained

below.

      The requirements of section 152(e) must be met regardless of

the language of the State court divorce decree.    See Miller v.

Commissioner, 114 T.C. 184 (2000), affd. sub nom. Lovejoy v.

Commissioner, 293 F.3d 1200 (10th Cir. 2002).     Petitioner as the

"noncustodial parent", is allowed to claim Shayla and Kevin as

dependents only if one of the three statutory exceptions in

section 152(e) is met.    Under these exceptions, the "noncustodial

parent" is treated as providing over half of a child's support

if:   (1) Pursuant to section 152(e)(2), the custodial parent

signs a written declaration that such custodial parent will not

claim such child as a dependent, and the noncustodial parent

attaches such written declaration to the noncustodial parent's

return for the taxable year; (2) pursuant to section 152(e)(3),
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there is a multiple-support agreement between the parties as

provided in section 152(c); or (3) pursuant to section 152(e)(4),

there is a qualified pre-1985 instrument providing that the

noncustodial parent shall be entitled to any deduction allowable

under section 151 for such child, provided that certain other

requisites, not pertinent here, are met.

      None of the exceptions applies to this case.    A multiple-

support agreement was not in effect; the decree of divorce was

executed after 1984; and Ms. Cato did not release her claim to

the exemptions.    In 1998, Ms. Cato did not sign a Form 8332,

Release of Claim to Exemption for Child of Divorced or Separated

Parents, or any similar statement substantially in the form of a

Form 8332, to release to petitioner her right to claim deductions

for certain dependency exemptions.      Petitioner did not attach a

Form 8332 or anything substantially similar to his Federal tax

return for 1998.    See Miller v. Commissioner, supra.

      Petitioner is unable to show that he complied with the

requirements of section 152; thus, the Court sustains

respondent's determination that petitioner is not entitled to the

dependency exemption deductions for Shayla and Kevin in 1998.

2.   Child Tax Credit

      Respondent determined that petitioner is not entitled to

claim child tax credits on his 1998 return because he is unable

to substantiate that any one of his and Ms. Cato’s children was a

“child” as defined in section 151.
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      For the taxable year 1998, taxpayers are allowed to claim a

tax credit of $400 for each qualifying child.   Sec. 24(a).

Section 24(c)(1) defines a “qualifying child” as any individual

if:

          (A) the taxpayer is allowed a deduction under
      section 151 with respect to such individual for the
      taxable year,

          (B) such individual has not attained the age of 17
      as of the close of the calendar year in which the
      taxable year of the taxpayer begins, and

          (C) such individual bears a relationship to the
      taxpayer described in section 32(c)(3)(B). [Emphasis
      added.]

The plain language of section 24 establishes a three-pronged test

to determine whether a taxpayer has a qualifying child.     In

effect, if one of the qualifications is not met, the claimed

child tax credit must be disallowed.   The first element of the

three-pronged test requires that a taxpayer must have been

allowed a deduction for that child under section 151.   Sec.

24(c)(1)(A).

      Respondent determined that petitioner is not entitled to

section 151 dependency exemption deductions for Shayla and Kevin

for 1998.   The Court has held that respondent’s determination

regarding the section 151 deductions are valid.   That holding is

dispositive of this issue, and, as a result, the Court sustains

respondent’s determination regarding the section 24 child tax
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credits and holds, because of the plain language of the statute,

that petitioner is not entitled to the claimed child tax credits.

     Reviewed and adopted as the report of the Small Tax Case

Division.

                                      Decision will be entered

                              under Rule 155.
