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Bidzimou v. Commissioner (T.C. Memo. 2020-85)

On June 15, 2020, the Tax Court issued a Memorandum Opinion in the case of Bidzimou v. Commissioner (T.C. Memo. 2020-85). The primary issue before the court in Bidzimou was whether a state court’s order awarding the petitioner the right to claim a tax exemption for petitioner’s minor child, despite not being the child’s custodial parent, could operate as a substitute Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent), or equivalent declaration signed by the custodial parent.

Dependency Exemption Deduction

The Code allows taxpayers an annual exemption deduction for each of the taxpayer’s dependents. IRC § 151(a); IRC § 151(c). A dependent is either a qualifying child or a qualifying relative. IRC § 152(a).

A qualifying child must meet five requirements for the taxpayer to qualify for the deduction. IRC § 152(c). To be a taxpayer’s qualifying child, an individual must: (A) bear a specified relationship to the taxpayer; (B) have the same principal place of abode as the taxpayer for more than one-half of the taxable year; (C) meet certain age requirements; (D) have not provided over one-half of his or her own support for the year; and (E) not have filed a joint return with his or her spouse for the taxable year. IRC § 152(c)(1).

The pertinent factor in Bidzimou is the residence requirement. The child must have the same principal place of abode as the taxpayer for more than 50% of the taxable year. IRC § 152(c)(1)(B). The Tax Court has counted a child’s nights spent with a parent in determining whether the child has the same principal place of abode as that parent for more than one-half of the taxable year. See Skitzki v. Commissioner, T.C. Memo. 2019-106, *9; Stapleton v. Commissioner, T.C. Memo. 2015-171, *5-*6.

An individual who is a member of the taxpayer’s family may be a qualifying relative, for the years at issue, if the taxpayer provided more than 50% of the individual’s support, the individual’s gross income was less than the IRC § 151(d) exemption amount, and the individual was not the qualifying child of the taxpayer or of any other taxpayer. See IRC § 152(d)(1); Rev. Proc. 2013-35, § 3.23(1).

Special Rule for Divorced Parents

In the case of divorced or separated parents, a special rule determines which parent is entitled to a dependency exemption deduction for a child. IRC § 152(e). Generally, a child who is in the custody of one or both of the child’s parents for more than 50% of the calendar year and receives more than 50% of his or her support from parents who are divorced or separated or who live apart at all times during the last six months of the calendar year will still be considered the qualifying child of the custodial parent. IRC § 152(e)(1). In turn, “custodial parent” is defined as the parent having custody for the greater portion of the calendar year. IRC § 152(e)(4)(A).

Written Declaration / Unconditional Release

Pursuant to IRC § 152(e), a child will be treated as a qualifying child of the noncustodial parent rather than of the custodial parent when the following requirements are met: (1) the custodial parent signs a written declaration, in the manner and form prescribed by regulations, stating that she will not claim the child as a dependent for each year at issue, and (2) the noncustodial parent attaches the declaration to his return for each year. IRC § 152(e)(2).

The written declaration must be an “unconditional release” of the custodial parent’s claim to the child as a dependent. Treas. Reg. § 1.152-4(e)(1)(i). The declaration required under IRC § 152(e)(2) must be made either on a completed Form 8332 or on a statement “conforming to the substance of Form 8332.” Miller v. Commissioner, 114 T.C. 184, 189 (2000); Treas. Reg. § 1.152-4(e)(1)(ii); Armstrong v. Commissioner, 139 T.C. 468, 472 (2012), aff’d, 745 F.3d 890 (8th Cir. 2014).

A written declaration not contained on a Form 8332 must “conform to the substance” of that form and must be a document “executed for the sole purpose of serving as a written declaration.” Treas. Reg. § 1.152-4(e)(1)(ii). Court orders, decrees, and separation agreements executed in a taxable year beginning after July 2, 2008, do not qualify. Treas. Reg. § 1.152-4(e)(1)(ii); Treas. Reg. § 1.152-4(e)(5).

(T.C. Memo. 2020-85) Bidzimou v. Commissioner

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