Tuesday, May 13, 2003
Separated Parents Dependancy Ruling.
IRS wanted to deny a dependency exemption to Michael Kevin for his daughter from a previous marriage. While the separation agreement gave him the right to claim the exemption, it was not incorporated into the eventual divorce decree. Also, the separation agreement did not specify which years the exemption was for or what conditions would cause the agreement to end.
Tax Court ruled for Kevin. The separation agreement met statutory requirements, and there is nothing in the code or regs requiring that it be incorporated explicitly into the divorce decree. Under the state's law, the separation agreement is still an enforceable contract, and that is good enough. Also, the lack of specifying years did not invalidate the agreement's effect on the exemption, as the language of the agreement made it clear that it applied to all years.
Nice call by the Tax Court. There are a lot cases on the issue of claiming kids from separated parents. Obviously, these rules need simplification.