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Wednesday, April 09, 2003


FEDNER FRANCOIS TOVAR claimed his daughter on his 1999 return pursuant to a 1990 child custody agreement wherein his ex-wife gave up the exemption. He filed electronically, but then mailed two copies of the agreement to the IRS. IRS disallowed the deduction based on the language in the agreement that required Tovar to pay child support until his daughter turned 18. The daughter was by then 20. IRS abandoned this argument at trial, but tried to claim that the exemption should be disallowed because Tovar did not file the agreement with the return. Tax Court called bullshit on that argument, noting that the IRS had originally denied the exemption based on the very document they were now claiming was not filed. Tax Court allowed the exemption, but, unfortunately for Tovar, in the course of the litigation it came out that his daughter had not stayed with him more than half the year, causing him to lose Head of Household filing status and the Earned Income Tax Credit.

This case leaves me a bit confused. I have read many cases now where Tax Court has denied exemptions for separated parents who failed to attach a form signed by the custodial parent refusing the exemption. This has specifically come up in cases where the non-custodial parent attached divorce documents purporting to transfer the exemption from the custodial parent, and the documents were attached pursuant to IRS instructions. In all the other cases, none of this was good enough, Tax Court said the law required the signed form. In this case, attaching the divorce documents was accepted as legitimate by both the IRS and Tax Court without discussion. So what�s the difference? My guess is it is that in this case the divorce papers are an agreement signed by both parents, whereas the previous cases involved, if I remember correctly, divorce decrees and court orders. But I have to guess, because this difference is not discussed in either this case or the others.

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