In Uncategorized on 02/23/2022 at 16:15

Jamie Lee Hicks, Jr., T. C. Memo. 2022-10, filed 2/23/22,looked like an also-ran for sure, but as he came to the head of the stretch, the Shared Parenting Plan (SPP) he tendered post-exam saved the tax treatment of one of his two (count ’em, two) kids, even though he was noncustodial and the kid was not a qualifying child.

Jamie Lee lived apart from Oddimissia for the whole of the year at issue, but the minors they had produced lived with Oddimissia and her mom, Juanita. Jamie Lee did provide more than half both kids’ support, and they didn’t provide more than half of their own. Oddimissia claimed the kids as dependents; the SPP said she and Jamie Lee each could take one. IRS bounced Oidmissia’s return.

Although Jamie Lee never attached the SPP to his return, and of course there was no Form 8332 or written equivalent. And the year at issue is post-2008, so the divorce decree or separation agreement can’t satisfy Reg. Section 1.152-4(e)(1)(ii), (h).

But Judge Nega finds the SPP can fill the bill.

Jamie Lee can wild-card in the SPP. The 2017 proposed regs. (Prop. Reg. Section 1.152-5(e)(2)(i), 82 Fed. Reg. at 6387) say until they become final, the taxpayer can put in a Form 8332 or substitute as long as the year is open. And since the year at issue is open, per Section 6503(a)(1), by stiping in the SPP IRS has waived attachment to Jamie Lee’s return.

“Our precedents make clear that this provision imposes several requirements on any document that a taxpayer offers as a written declaration for purposes of section 152(e). First, it must be signed by the custodial parent. Second, it must not place any conditions on the custodial parent’s declaration that he or she will not claim a child as a dependent. And third, it must otherwise meet the manner and form requirements the Secretary has prescribed by regulation.

“The Shared Parenting Plan meets all of these requirements. In addition to bearing Oddimissia’s signature, it grants petitioner the unconditional right to ‘claim’ one child ‘every year for tax purposes unless [the] parties reach another agreement in writing.’ We are aware of no written agreement between Oddimissia and petitioner that limits this right. Although the state court modified the Shared Parenting Plan in its [subsequent] order (which neither Oddimissia nor petitioner signed, though the order represents that they both agreed with its terms), those modifications did not diminish, for federal income tax purposes, the right that Oddimissia granted to petitioner in the Shared Parenting Plan. Rather, the [subsequent] order purported to expand that right by allowing petitioner to claim both children instead of just one. The agreement reflected in the Shared Parenting Plan therefore remains in effect, regardless of the later state court order purporting to expand on that agreement.” T. C. Memo. 2022-10, at p. 8 (Citations omitted.) (Footnotes omitted, but one says because neither Jamie Lee nor Oddimissia signed the subsequent order, Jamie Lee can deduct only one kid).

Word to the family law bar: This may be a template for saving qualifying relative status for noncustodial children. Note that the law and regs are subject to change, so YMMV.


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