D. Stussy wrote:

- quote -

Even given your logic below, I would say your statement is
overreaching. That is, if the parties *do* want to "bind"
the outcome so that the noncustodial parent gets the
exemption, then clearly the 8332 and the Tax Court decision
act to do just that.

- quote -

The Tax Court ruled on the applicability of the IRC
provision dealing with children of parents who are not
married to each other and did not live together for the
requisite period. As such, it ruled that the treatment is
*identical* for both divorced parents (that is, those who
were married) and for parents who have never been married,
but lived apart the requisite time period (last six months
of the year as I recall).

While I agree that the form is not required, you are
required to comply with the regulations for a noncustodial
parent to claim the child. That is, the Tax Court found
that Section 152(e) applies and, as such, the "lumping" of
all support paid for both parents and the default of
granting the exemption to the custodial parent applies--so
even if I, as the noncustodial parent, provide 80% of the
support for the child, I don't get the dependency exemption
unless I have a signed document that conforms to the
requirements in the regulations--and an 8332 manages to do
just that.

--
Ed Zollars, CPA
Phoenix, Arizona

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- quote -

I should look at the form. The 2120 is filed by the person
claiming the exemption, requiring written statements from
each person NOT claiming the exemption stating only their
name, social security number, address, and the name of the
supported party, and stating they waive any right they may
have to claim that party as a dependant for that year. There
doesn't seem to be a requirement that they HAVE any right to
claim the party as a dependant, nor that the statement
cannot be written out in advance.

It's only the person FILING the 2120 and claiming the
dependant who has to assert (under penalty of perjury) that
he/she meets the eligibility requirements.

So -- my statement should have been that the "divorce"
agreement should include a requirement to write the
supporting statements and send them to the parent who is to
take the deduction.

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- quote -

Why? For parents never married, the form should NOT be used.

The recent Tax Court ruling on this issue was based on the
fact that the form was used, not that the form was even
required for the situation. If the form were to be used in
the future, that effectively binds the outcome, but where
the form isn't required (and the Court didn't address or
change that part of the statute by its ruling), it
shouldn't.

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"Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote:
- quote -

I was going to do that for a never married client this year,
but the requirements for a 2120 include, "No one alone paid
over half of that person's support."

I went ahead and used Form 8332. At least now I have some
support for my decision.

Joel Berry, CPA
Sugar Land, Texas

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D. Stussy wrote:

- quote -

The Tax Court has been pretty clear in a number of cases
that a writing that agrees with the explicit requirements of
the regulations is required. So while that document doesn't
have to be an 8332, it does have to essentially contain all
information that is required to be provided in an 8332. An
oral contract wouldn't meet that requirement unless it was
reduced to the required writing for attachment to the return
of the noncustodial parent.

- quote -

The Tax Court has also been clear that federal law here does
not depend on state law. Rather, the question is
"self-contained" in Title 26 of the US Code and the
regulations for that Title.

What you need to do is get a state court to compel the
actions that are required by federal law--in that case,
you'd get the deduction, but the question of whether the
custodial spouse "had" to execute that document and can be
compelled to do so is an issue that is left to the state
courts. The Tax Court just wants to see the properly
executed document.

--
Ed Zollars, CPA
Phoenix, Arizona

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"D. Stussy" wrote:
- quote -

For parents never married, I'd suggest requiring a 2120 in
the "divorce" settlement.

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Arthur L. Rubin wrote:
- quote -

Side note: I'd be careful about any requirement that an
8332 is for parents never married, despite what the Tax
Court said. I believe that the ruling went as it did
because the 8332 was executed, not because it was actually
REQUIRED.

Verbal agreements ("Oral Contracts") do have standing in my
state. Proving that they occurred when there are no
witnesses is another matter.

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Herb Smith wrote:

- quote -

It's not binding for tax purposes, but I don't see why
a contract to provide the signed form 8332 in return
for payment might not be LEGALLY binding.

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dustysocks[at]backpacker.com (Chris) wrote:

- quote -

In order for the non-custodial parent to claim the child as
a dependent, the CUSTODIAL parent (whether they had been
married or not) must waive that right by giving the
non-custodial parent a signed Form 8332 for the year in
question. Verbal agreements have no standing. I have no idea
what you mean by "buy my wife out", but it is probably not
binding.

Since your wife is the custodial parent, and you intend to
claim Clara as a dependent, then go ahead and claim the
withholding allowance on your W-4. You can't control what
the father is planning to do.

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dustysocks[at]backpacker.com (Chris) writes:

- quote -

I think your wife is the best person to ask, since none of
us knows how this arrangement really works. If you know
that Clara will be a dependent on your return for 2003, go
ahead and claim a withholding allowance for her. If it's up
in the air, you're probably better off not claiming it.
What the father is doing on his W-4 is immaterial.

From a tax law standpoint whoever has custody gets the
exemption unless the written decree says otherwise or the
custodial parent gives it up for the specific year in
question.

Phil Marti
Topeka, KS

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I got married just recently; my wife has a daughter, Clara.
Clara's father and my wife have a verbal agreement that they
will alternate claiming Clara on their taxes; however,
Clara's father has an option to buy my wife out if he wants
to claim Clara during my wife's tax year.

My question is this: I'm changing the number of exemptions
on my W-4 and want to know if I can add Clara as an
exemption since this is my wife's year. The weird thing is
that Clara's dad has been claiming her as well. Should I
play it safe and NOT claim her or should I claim her. By
rights (I guess), I should be able to do that since we will
be claiming her on our taxes this year, filing jointly.

Thanks!

Chris Stewart

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