Without Custody or a Form 8832, A Dependency Exemption is Not in the Cards (Henricks v. Comm’r)
Henricks v. Comm’r, T.C. Memo. 2014-192, 2014 WL 4723148 (2014)
(a) Facts: A Florida divorce decree awarded custody of two children to the wife. It allowed the wife to claim one child as a dependent for tax purposes, and allowed the husband to claim the other child as a dependent for tax purposes. Both parties were ordered to fill out forms necessary to transfer the exemption. But the wife did not actually fill out and sign and forms, and the wife did not sign the court’s judgment.
The husband claimed the dependency exemption for the second child, as the decree clearly permitted. The IRS disallowed the dependency exemption and assessed a deficiency.
(b) Issue: Was the husband entitled to claim the dependency exemption?
(c) Answer to Issue: Clearly not.
(d) Summary of Rationale: Federal law has been clear for years that when one parent has custody of a child, and the other parent wishes to claim the dependency exemption, the second parent absolutely must file with his return a copy of IRS Form 8832 or its substantial equivalent, signed by the first parent. Form 8832 must be filed even if a state court order directs transfer of the exemption. Regardless of state court orders to the contrary, the exemption is not actually transferred unless Form 8832 is signed by the custodial parent. This is one of the harshest rules in all of federal tax law, but the rule has been in force for years and it is zealously enforced by the IRS.
The husband argued that the state court divorce decree was a substantial equivalent of Form 8832. This argument almost always loses. It lost in this case because the law requires that a signed copy of Form 8832 be filed, and the wife did not sign the divorce decree. The fact that the court signed the decree was not a sufficient substitute.
Because the wife signed nothing, the state court did not actually make an enforceable transfer of the dependency exemption. The husband’s remedy was to ask the wife to sign Form 8832, and to petition the state court to hold her in contempt if she refused. Absent a signed copy of Form 8832, the husband could not simply claim the dependency exemption.
Longino v. Comm’r, 593 F. App’x 965 (11th Cir. 2014) (unpublished)
(a) Facts: Upon the parties’ divorce, the mother received custody of their three children. The father was awarded the tax exemptions for all three children.
In a later tax year, the father claimed the dependency exemption for all three children, without attaching a signed copy of Form 8832 to his return. He amended the return twice, each time failing to attach a signed copy of Form 8832.
The IRS disallowed the exemption, and found many other problems with the father’s various tax returns. A substantial deficiency was assessed, and the father appealed to the Tax Court. The Tax Court held for the IRS, and the father appealed to the Eleventh Circuit.
(b) Issue: Was the father entitled to the dependency deduction?
(c) Answer to Issue: No.
(d) Summary of Rationale: “Because Longino did not attach to his return a declaration signed by the custodial parent of his children, he is not entitled to the exemptions.” Id. at 968.
Observation: The result of this appeal is completely foreseeable, and it is unclear how the taxpayer reasonably hoped to prevail.