Attorney-at-Law

ODDS OR EVENS

In Uncategorized on 07/18/2019 at 15:29

Once again a family lawyer is asleep at the switch. The quick-and-cheap split of the dependency income exclusion (one parent gets the exemption in odd-numbered years, the other in evens) in a separation agreement or divorce decree is worthless without Forms 8332 signed and in escrow.

I’ve blogged this again and again.

Yes, I know that Section 151(d)(5)(A) says “In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026 …(T)he term ‘exemption amount’ means zero.”

But there are years prior, and maybe years to come.

Judge Buch has the case of Jason George DeMar, 2019 T. C. Memo. 91, filed 7/18/19, and it’s a Rule 121 on-the-papers.

JG claims he sent in the Form 8332 after he filed his HOH return for the year at issue, while his return was in Examination. And after his loved-once had already taken the exemption on her return for the year at issue, raising potential double-dip.

Judge Buch: “We need not reach the question of whether section 152(e)(2)(B) leaves room for a noncustodial parent to submit Form 8332 or a similar written declaration at some point after filing his or her original return.  The current regulations do not explicitly allow (or prohibit) Form 8332 or a similar written declaration to be submitted during examination or with an amended return.  Sec. 1.152-4, Income Tax Regs.  A proposed regulation explicitly permits a noncustodial parent to submit Form 8332 or a similar written declaration during examination or with an amended return.  Sec. 1.152-5(e)(2)(i), Proposed Income Tax Regs., 82 Fed. Reg. 6387 (Jan. 19, 2017).  But that regulation requires that the custodial parent either did not claim the dependency exemption or filed an amended return removing the claim to the dependency exemption.  Id.  We have no such facts in the record.” 2019 T. C. Memo. 91, at pp. 5-6.

Has any reader seen a malpractice suit by a parent who gets the exemption denied despite compliance with separation agreement or divorce decree, for want of Form 8332 or equivalent?

 

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