Soriano v. Soriano
Decision Date | 12 December 1990 |
Docket Number | No. 19407,19407 |
Citation | 184 W.Va. 302,400 S.E.2d 546 |
Court | West Virginia Supreme Court |
Parties | Luis E. SORIANO v. Mayra M. SORIANO. |
Syllabus by the Court
1. "As an incident to awarding child support, a circuit court may allocate the federal and state income tax child dependency exemption to the non-custodial parent under IRC § 152(e), as amended in 1984, by requiring the custodial parent to execute the necessary waiver under IRC § 152(e)(2)(A) to allocate the dependency exemption to the non-custodial parent." Syl. pt. 6, Cross v. Cross, 178 W.Va. 563, 363 S.E.2d 449 (1987).
2. In a case where the dependency exemption is allocated, that is, where a trial court requires the custodial parent to execute the necessary waiver pursuant to 26 U.S.C. § 152(e)(2)(A), as amended, the trial court should set forth its reasons for doing so in the order awarding child support. These reasons should clearly demonstrate that it is more equitable to allocate the dependency exemption to the noncustodial parent than it would be to allow the custodial parent to claim the dependency exemption.
Michael C. Doss, Walter W. Weiford, Marlinton, for Mayra M. Soriano.
Martin V. Saffer, Marlinton, for Luis E. Soriano.
This case is before the Court upon the appeal of Mayra M. Soriano, from the final order of the Circuit Court of Pocahontas County. The appellee is Luis Soriano. For the reasons set forth in this opinion, we remand this case.
The appellant and appellee were married in the Dominican Republic on November 20, 1971. The parties were divorced on April 6, 1987. Three children were born of the marriage, all minors at the time of the parties' divorce.
A special commissioner was appointed in the underlying divorce action. The special commissioner recommended that the parties be granted a divorce and that the appellant be awarded custody of the three minor children. 1
Following a hearing in the circuit court, the parties were granted a divorce. The April 6, 1987 order granting such divorce awarded custody of the children to the appellant. This order also provided that the appellee would pay child support in the amount of $250 per month per child and that "the child exemptions and deductions for Internal Revenue Service purposes, including 1986, be granted to the Plaintiff[,]" the appellee herein.
The appellant failed to execute the appropriate documents which would allow her former husband, the appellee, to claim the children as dependents. Consequently, the circuit court, on February 6, 1989, entered an order requiring the appellant to execute the appropriate documents so as to allow the appellee to claim the dependent exemptions.
The appellant refused to execute the pertinent documents, and, consequently, the circuit court, on June 21, 1989, held that the appellant "is in contempt of the spirit of the Order of this Court entered on April 6, 1987." It is the June 21, 1989 circuit court order which is appealed in this case. 2
The narrow issue in this case is whether a trial court has the power to order a custodial parent to waive a dependent exemption for income tax purposes to which such custodial parent would otherwise be entitled pursuant to 26 U.S.C. § 152 (1988).
Before we address this issue, a brief discussion of general provisions under the Internal Revenue Code is necessary. There are three important Internal Revenue Code provisions with which we deal in addressing the issue in this case: 26 U.S.C. § 151(c)(1) (1988), which provides an exemption for each dependent of a taxpayer; 26 U.S.C. § 152(a) (1988), which sets forth the definition of "dependent"; and 26 U.S.C. § 152(e) (1988), the key provision in this case, which addresses the situation of divorced parents, and which parent in such situation may claim the dependency exemption.
A taxpayer is entitled to a personal exemption deduction for each of his or her dependents. 26 U.S.C. § 151(c)(1) (1988) provides:
(c) Additional exemption for dependents
(1) In general
An exemption of the exemption amount for each dependent (as defined in section 152)--
(A) whose gross income for the calendar year in which the taxable year of the taxpayer begins is less than the exemption amount, or
(B) who is a child of the taxpayer and who (i) has not attained the age of 19 at the close of the calendar year in which the taxable year of the taxpayer begins, or (ii) is a student who has not attained the age of 24 at the close of such calendar year. 3
As parenthetically noted in § 151(c)(1), 26 U.S.C. § 152 (1988) defines "dependent." Specifically, paragraph (1) of § 152(a) sets forth the following:
(a) General definition
For purposes of this subtitle, the term 'dependent' means any of the following individuals over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer (or is treated under subsection (c) or (e) as received from the taxpayer):
(1) A son or daughter of the taxpayer, or a descendant of either[.]
The issue in this case squarely confronts this Court's holding in Cross v. Cross, 178 W.Va. 563, 363 S.E.2d 449 (1987). There, we held:
As an incident to awarding child support, a circuit court may allocate the federal and state income tax child dependency exemption to the non-custodial parent under IRC § 152(e), as amended in 1984, by requiring the custodial parent to execute the necessary waiver under IRC § 152(e)(2)(A) to allocate the dependency exemption to the noncustodial parent. 4
Id., syl. pt. 6.
26 U.S.C. § 152(e) (1988), in pertinent part, provides:
(e) Support test in case of child of divorced parents, etc.
(1) Custodial parent gets exemption
Except as otherwise provided in this subsection, if--
(i) who are divorced or legally separated under a decree of divorce or separate maintenance,
(ii) who are separated under a written separation agreement, or
(iii) who live apart at all times during the last 6 months of the calendar year, and
such child shall be treated, for purposes of subsection (a), as receiving over half of his support during the calendar year from the parent having custody for a greater portion of the calendar year (hereinafter in this subsection referred to as the 'custodial parent' ).
(2) Exception where custodial parent releases claim to exemption for the year
A child of parents described in paragraph (1) shall be treated as having received over half of his support during a calendar year from the non-custodial parent if--
(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and
(B) the noncustodial parent attaches such written declaration to the noncustodial parent's return for the taxable year beginning during such calendar year.
For purposes of this subsection, the term 'noncustodial parent' means the parent who is not the custodial parent.
(emphasis supplied)
Prior to 1985, under 26 U.S.C. § 152(e), a child was treated as receiving over one-half of his or her support from the parent who had custody of such child for the greater part of the year; hence, the custodial parent was entitled to a personal exemption deduction for that dependent child. A "special rule" existed, however, pursuant to 26 U.S.C. § 152(e)(2), which provided that the noncustodial parent could claim the dependency exemption if: (1) the divorce decree or a written agreement between the parents provided that the noncustodial parent would claim the exemption and if the noncustodial parent provided at least $600 for the support of the child during the year; or (2) the noncustodial parent provided at least $1200 for the support of the child during the year and the custodial parent failed to clearly establish that he or she provided more support for the child than did the noncustodial parent.
As a result of the former version of this statutory provision, the Internal Revenue Service was placed in the middle of many disputes between divorced parents, both of whom contended that they were entitled to the dependency exemption for their child(ren). The costly nature of the previous version of 26 U.S.C. § 152(e) is evidenced by the legislative history of the current version:
Reasons for Change
The present rules governing the allocations of the dependency exemption are often subjective and present difficult problems of proof and substantiation. The Internal Revenue Service becomes involved in many disputes between parents who both claim the dependency exemption based on providing support over the applicable thresholds. The cost to the parties and the Government to resolve these disputes is relatively high and the Government generally has little tax revenue at stake in the outcome. The committee wishes to provide more certainty by allowing the custodial spouse the exemption unless that spouse waives his or her right to claim the exemption. Thus, dependency disputes between parents will be resolved without the involvement of the Internal Revenue Service.
H.R.Rep. No. 432, 98th Cong., 2d Sess., pt. II, reprinted in 1984 U.S.Code Cong. & Admin.News 697, 1140.
As can be seen in the current version of 26 U.S.C. § 152(e) (1988), quoted above, the general rule is that a child is treated as receiving over one-half of his or her support from the custodial parent. This general rule is subject to three clear exceptions, only one of which we address in this case, specifically, where the custodial parent releases his or her claim to the exemption for a particular year pursuant to 26 U.S.C. § 152(e)(2). 5
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