Westerhof v. Westerhof, Docket No. 71176

• Decision Date: 09 November 1984
• Docket Number: Docket No. 71176
• Citation: 357 N.W.2d 820,137 Mich.App. 97
• Parties: Brenda G. WESTERHOF, Plaintiff-Appellant, v. Phillip A. WESTERHOF, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 820

357 N.W.2d 820

137 Mich.App. 97

Brenda G. WESTERHOF, Plaintiff-Appellant, v. Phillip A. WESTERHOF, Defendant-Appellee.

Docket No. 71176.

Court of Appeals of Michigan.

Submitted May 3, 1984.

Decided Sept. 4, 1984.

Released for Publication Nov. 9, 1984.

Hann, Doss & Persinger, P.C. by Donald H. Hann, Holland, for plaintiff-appellant.

Bussard & Sielski by James W. Bussard, Grand Haven, for defendant-appellee.

Before SHEPHERD, P.J., and CYNAR and BORMAN ^*, JJ.

BORMAN, Judge.

Plaintiff, Brenda Westerhof, and defendant, Phillip Westerhof, were divorced by order of the Ottawa County Circuit Court on December 22, 1982. The judgment of divorce granted plaintiff custody of the couple's three children: Gretchen Lynn, born October 14, 1967; Heidi Monique, born January 21, 1971; and, Phillip Lee, born February 5, 1975. The judgment was amended by an order dated April 15, 1983, which permitted defendant to claim Gretchen Lynn and Heidi Monique as dependents for tax purposes. Plaintiff appeals from the amended judgment as of right.

Plaintiff's complaint for divorce was filed on April 2, 1982. On April 6, 1982, an ex-parte interim order was entered requiring defendant to pay $120 per week for the support of the three children. Following a hearing on April 26, 1982, an order was entered pursuant to defendant's petition reducing the weekly child support payment to $85.

In a motion dated June 29, 1982, plaintiff requested that the trial court increase the amount of temporary support for the reason that defendant understated his income at the previous hearing. The motion was heard on July 12, 1982. An order increasing the temporary support payments to $96 per week was entered on August 24, 1982.

The original judgment of divorce required defendant to pay child support in the amount of $87 per week. No provision was made for either party to claim the children as dependents on their federal income tax returns.

On February 1, 1982, defendant petitioned the circuit court for an order allowing him to claim all three children as dependents or, in the alternative, to reduce defendant's child support payments to reflect his increased tax burden. The hearing on defendant's petition was held on February 7, 1983. Defendant's uncontradicted testimony indicated that the trial judge had stated at the July 22, 1982, hearing that defendant would be entitled to claim two of the children as dependents. Plaintiff had, however, claimed all three children as dependents on her 1982 tax return. Defendant argued that since he paid more than $1,200 in support of each child he was entitled to the deductions. No evidence was produced on plaintiff's behalf to establish that she had paid more than one-half of the children's support. Following the parties' arguments, the trial court ruled from the bench that:

"The Court believes that Mr. Westerhof should be permitted to take two of the children as dependents, the older two, so long as his support is up to date."

I. DID THE TRIAL COURT HAVE THE AUTHORITY TO DETERMINE HOW DEPENDENCY EXEMPTIONS WERE TO BE DISTRIBUTED BETWEEN THE PARTIES TO THE DIVORCE?

The issue of whether a state trial court has subject matter jurisdiction to determine how dependency exemptions should be divided between the parties to a divorce has not yet been addressed by the appellate courts of this state. Unquestionably, the right of the United States to collect federal taxes exists independent of state law. United States v. Union Central Life Ins. Co., 368 U.S. 291, 82 S.Ct. 349, 7 L.Ed.2d 294 (1961); Leuschner v. First Western Bank & Trust Co., 261 F.2d 705 (CA9, 1958). By federal statute, the parent who provides more than one-half the support for a child is entitled to a $1,000 tax exemption. 26 U.S.C. Secs. 151(e), 152(a). The general rule for determining whether a taxpayer is entitled to dependency exemptions is set forth in 26 U.S.C. Sec. 152(a):

"(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 * * *."

In Vinet v. Vinet, 184 So.2d 33 (La.App.1966), the Louisiana Court of Appeals ruled that the state court was without jurisdiction to pass on the question of which party was entitled to receive the tax exemption for the parties' children. The Louisiana Court explained that the right to the exemption could only be established by the proper taxing authority.

In 1967, following the Vinet decision, Sec. 152 of the Internal Revenue Code ("IRC") was amended to include a special support test for the children of divorced parents:

"(e) Support test in case of child of divorced parents, etc.

"(1) General rule. -- If--

"(A) a child (as defined in section 151(e)(3)) receives over half of his support during the calendar year from his parents who are divorced or legally separated under a decree of divorce or separate maintenance, or who are separated under a written separation agreement, and

"(B) such child is in the custody of one or both of his parents for more than one-half of the calendar year,

"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 unless he is treated, under the provisions of paragraph (2), as having received over half of his support for such year from the other parent (referred to in this subsection as the parent not having custody).

"(2) Special rule. The child of parents described in paragraph (1) shall be treated as having received over half of his support during the calendar year from the parent not having custody if--

"(A)(i) the decree of divorce or of separate maintenance, or a written agreement between the parents applicable to the taxable year beginning in such calendar year, provides that the parent not having custody shall be entitled to any deduction allowable under section 151 for such child, and

"(ii) such parent not having custody provides at least $600 for the support of such child during the calendar year, or

"(B)(i) the parent not having custody provides $1,200 or more for the support of such child (or if there is more than one such child, $1,200 or more for each of such children) for the calendar year, and

"(ii) the parent having custody of such child does not clearly establish that he provided more for the support of such child during the calendar year than the parent not having custody.

"For the purposes of this paragraph, amounts expended for the support of a child or children shall be treated as received from the parent not having custody to the extent that such parent provided amounts for such support." 26 U.S.C. Sec. 152(e).

Section 152(e) has been interpreted by the United States Tax Court as providing a general rule that the parent having custody of the child for the greater portion of the calendar year is entitled to the dependency exemption for the child. McGuire v. Comm'r. of Internal Revenue, 77 T.C. 765 (1981). The exceptions to the general rule are contained in Sec. 152(e)(2)(A) and (B). The first of these exceptions grants the exemption to the parent not having custody, if the decree of divorce or separate maintenance or a written agreement between the parents specifies that the noncustodial parent is entitled to the exemption, providing that the noncustodial parent has contributed at least $600 to the support of the child during the year. The second exception provides that the noncustodial parent is entitled to the exemption if he contributes $1,200 or more to the support of the child for the tax year in question and the custodial parent does not clearly establish that it provided the majority of support during the year. The words "clearly establish" have been interpreted as imposing a burden of proof on the custodial parent to demonstrate support contributions by a clear preponderance of the evidence, rather than imposing the clear and convincing standard of proof. McGuire v. Comm'r. of Internal Revenue, 77 T.C. 765, 770 (1981).

Following the 1967 amendment to Sec. 152, the courts of other states have consistently held that a state court has the power to make a determination as to which parent will be entitled to the dependency exemption. See, e.g., MacDonald v. MacDonald, 122 N.H. 339, 443 A.2d 1017 (1982); Morphew v. Morphew, Ind.App., 419 N.E.2d 770 (1981); Niederkorn v. Niederkorn, 616 S.W.2d 529 (Mo.App.1981); Grider v. Grider, 376 So.2d 1103 (Ala.Civ.App.1979); Roberts v. Roberts, 553 S.W.2d 305 (Mo.App.1977); Pettitt v. Pettitt, 261 So.2d 687 (La.App.1972); Kolb v. Kolb, 479 S.W.2d 81 (Tex.Civ.App.1972). In reaching its determination that the granting of a dependency exemption was within the jurisdiction of the trial court, the Louisiana Court of Appeals in Pettitt, supra, reasoned:

"The federal statute specifically contemplates and gives recognition to a state court judgment decreeing that the parent not having custody shall be entitled to the allowable deduction for the child if the other requirements of the statute are met. It is proper for the state court to regulate this matter as it is an important factor in the financial relationship between the persons concerned. Further, it facilitates a determination between the parents as to who is entitled to the deduction." 261 So.2d 687, 690.

Furthermore, the 1967 amendment has been broadly interpreted so as not to limit jurisdiction to determinations made in the original judgment of divorce. In Grider, supra, the Alabama Court of Civil Appeals explained:

"Congress has authorized divorce courts to order that a non-custodial parent may claim a child as a deduction. Such order must be followed by the IRS if he...