# Petition for Writ of Certiorari — Schneier v. Commissioner > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1732%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1985 - **Citation:** 469 U.S. 1190 ## Text Caen 84-819 © NO. by IN THE SUPREME COURT OF THE WY 1 1624 UNITED STATES OCTOBER TERM 1984.9 ~~ MAX SCHNEIER, Petitioner, Vv. COMMISSIONER OF INTERNAL REVENUE, Respondent PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT MAX SCHNEIER, Pro Se 4150 VIA DOLCE # 224 MARINA DEL REY, CA. 90291 (213) 823-7473 ALEXAMOLF t. | | Office -Suprame Court, U | FILED QUESTIONS PRESENTED 1. Whether respondent Commissioner can constitutionally promulgate a Revenue Ruling which repeals a long-standing spe- cific,unequivocal,vested,statutory and regulatory right and privilege,thus di- vesting petitioner~(and countless other taxpayers similarly situated)-of the abil- ity to take his (and their) stepchildren as dependency exemptions and,as a result, depriving him (and them) of property gained by exercising that vested right and privilege upon which he (and they) justifiably relied? a. Whether a United States District Court of Appeals can constitutionally uphold and sanction such repeal and deprivation? b. Whether a United States Court of Appeals can constitutionally decide a federal question in a way in conflict with applicable decisions of the Supreme Court of the United States? ate LIST OF PARTIES All of the parties in the United States Court of Appeals for the Ninth Circuit are listed in the caption. -ii- TABLE OF CONTENTS PAGE Questions Presented .............. i CROE OE Pee a ceaks eens eeheuuye ie TUBES OE COMGRIES occ kccees te dws es iii TORIO GE GUEROCISIOS 2.0.05 cece ins iv-ix st a ee aa ee ere 1 Statement of Jurisdiction ........ 1-2 Statement of the Case .........20. 3-12 Reasons for Granting Petition .... 13-14 PO ee rr ee eee ee 14-63 Sere eee CTP eRT TE Te Cee 64-65 Appendix A: Giiebede., Decisions, Orders & Stipulation of Facts Below.... la-35a Appendix B: Federal Statutes, Treasury Regulations, Revenue Ruling, and Legislative History RPO 2s ha i 5s wee awk HVE CRO lb-15b -iii- TABLE OF AUTHORITIES CASES: PAGE: Burnet v. Harmel, SF Wah c PEED bo svt ncnenncres 37 C.I.R.v.Greenspun, 670 F.zd 123(0th oo CS . ) 3} 52 Claridge Apartments Co. v Comm'r, 323 U.S. Gi (194Gay. 59,60 Crane v. Commissioner i dee ee «6s 640.08 h 26 Crooks v. Harrelson 8 a 95. | Renner 16 D.B.Anders, 48 T.C.815(1967)..... 43 Dobson v. Commissioner, SEO UO. B. WUPERUED we osccccccceses 13 Gould v. Gould 245 U.S. 151, i & ¢ eee 27 Grace E.Lang 6, T+€.404(1975) a Greene V.McE] roy, 360 U-S.474 (195mg Greene Vv. United State 376 U.S. 149 Tog} tas He ~~? \ “ ay i len M.Lutter VC .I.R 61 T.C.685 - ~ BEST AVAILABLE COPY Sims v.United States, ‘357 F.2d 434 (Gth Cir.1958)........... 44 Social Sec Taft v.Helvering,31l U.S.195(1940)... 34 URI @ 5) aa 13-14-17- U.S. Det i siree6 pee bhlen 42-43 United aoe Vv. ppicego.B. & OR Co,, 412 U 60 Ser 13 United States v.Estate of Donnelly ee Wat RE 35d Oh cé vetcdeccces 59 United States v.Merriam Bt Re ie 27 U.Se SFOCTILS) cccccccccccccccces 59-60 ic Radio & T.V. U.S.v.Ol -vi- —————— | - CONSTITUTIONAL PROVISION INVOLVED 1. Article I, Section 8 [1] of the | United States Constitution provides in relevant part: The Congress shall have Power To lay and collect Taxes, Duties, Imposts, and Excises * * * 2. Article I, Section 8 [i8} of the United States Constitution provides that Congress shall have Power: To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States,or in any Depart- ment or Officer thereof. 3. The Fifth Amendment to the United States Constitution provides in relevant part: No person shall * * * be deprived of life,liberty,or property,without due process of law * * * . -vii- — > & a ' t q ql * , SY Si ie Soak ee: ee a -: Senate lio CY, i areca a Alb SORES IBS" Rs a Renae | aa, Fate 2065 sia re. ears “ eT ge ree, Ne as eer in LP ORL hy beet es SS a ne CLE ANN eminem bites» wt ae. FEDERAL STATUTES INVOLVED 28 USCA S 2101(c) 28 USCA S 1291 28 USCA S 7442 26 USCA S 151(a) (e) (1) (3) App. 26 USCA S 152(a) (2) (9) ;(e) App. 26 USCA S 6013(a), (d) (3), (e)(2) App. Tax Reform Act of 1984- App. Public Law 98-369,Section 423 (Eff.January 1,1985). TREASURY REGULATIONS INVOLVED 26CFR $1.151-1(a) ;2(a) (b¥;3(a) App. 26CFR S1.152-1(a) (1) ;2(i) ; (b) (c) ; (d) App. 26CFR $1.152-2(d) App. 26CFR S1.152-4(a) (d) App. 26CFR S1.6013-1(a) ;4(a) (b) ; 5 (c) App. REVENUE RULING INVOLVED 78-91, (1978, 1 CB 36) App. LEGISLATIVE HISTORY INVOLVED Senate Rept.No.488-90th Congress lst Session (1967 App. House Report No.102-90th Con- gress lst Session(1967) App. DOCUMENTS FROM RECORD ON APPEAL 8b 8b-10b 10b 10b-11b 11b-12b 13b 14b-15b 15b 1. Opinion,United States Court App.A of Appeals For the 9th Cire. pp,la-10a No. 83-7533, filed June 15, 1984. 2. Order, 9th Cir., filed App.A July 31, 1984 denying re- pp,lla-1l2a hearing and suggestion for rehearing en banc. -viii- ve sca! DOCUMENTS cont. 3. Order, 9th Cir., filed August 14, 1984 Order Staying mandate. 4. Memorandum Findings of Fact and Opinion; United States Tax Court No. 8277-82 5. Stipulations of Facts Docket No. 8277-82 dated April 4, 1983. = -ix- App. App. App. IN THE SUPREME COURT OF THE UNITED STATES AA econ a ——— OCTOBER TERM, 1984 NO. MAX SCHNEIER, Petitioner, Vv. COMMISSIONER OF INTERNAL REVENUE, Respondent PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT. Max Schneier, pro se, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Ninth Circuit in this case. OPINIONS BELOW The opinion of the court of appeals (App.A,infra,la-((a) has not been official- ly reported. The opinion of the Tax Court (App.A, infraj/4¥a-2Ja) has not been offi- cially reported. JURISDICTION The final judgment of the court of ap- peals was stayed on August 14,1984, pending whe ‘ 4 4 : ag anf is aif a tye | ie s iste ee ee “a — 2 this timely application for a writ of certiorari (App.A,infra,|3(a). A timely petition for rehearing and suggestion for a rehearing en banc, was denied on July 31,1984 (App.A,infrallai2a) The final judg- ment of the tax court was entered July 6, 1983 (App.A,infra,3Q(a). The jurisdic- tion of this Court is invoked under 28 U.S.C. 2101(c). /// /// /// /// /// /// /// /// /// /// /// /// /// 2 iu ais pial me” 12h Dies » 7 aA A wad: ik pe es ans Tae Se ae > ts if > ial, SA bt H 4 os , =f ¢ ah Dal, ed > _ we 7 5 ie dy - i, P ; . _ re f ' ae he —. Pg oe Se r i# sal hile it Ree Le Se as | eo i 4 | — im weal 4 ; -“* : : y a 'y ee oe Pes 4 .s } 5 - sl iy» Pass a) ‘ =) ' AE : Mer 1 Ms ‘ es : ai y are ( we ill 5 ae x + > bai i, ¢ » & vt : ee — ots a | i } rs : 4 : af ‘eal 5 ¥ nal. ro : Cm" : ay ee. , ‘fs JL i ce), o cy 7 :} RD , cz may, ° i ma. ra t i Poll mh? “o the iv ®e -¢( an) ’ , ve oan at & ‘ 5 7 ea + alee id ; 7 Bhs ; = Pontes « M : ae a = STATEMENT OF THE CASE 1. Petitioner timely filed a joint tax return for calendar year 1978 with his then wife to whom he was legaily married. (See Stipulation of facts (2)(5) App.A, infra,c,32a-33a.) On that joint return, he claimed as dependency exemptions his two then stepsons. (See Stipulation of Fact (6)(7),(App.A,infra,p,33a.) Peti- tioner claimed his dependency TP in accordance “SS existing statutes “- and regulations. I. 26 USCA 151(a)(e)(1)(3); 152(a)(2) or (9); 6013(a)(d) (3). (App.B,infra, pp, lb-4b for relevant parts) These statutes grant,inter alia, a step- father the specific and unequivocal right to take his stepchildren as dependent exemptions on his joint tax returm if he provides more than half of their support and they are members of his household for more than half a year. 2. 26 CFR 1.151-1(a);2(a) (b) ;3(a); 1.152-1 (a) (1) ;2(1); (6b); (c); 1.152-2(a) (1); (d) 5 1,152-4(a) ;(d) (1) (2); ; 1.6013-1 (a) ;4(a) (b) ;5(c). (App.B,infra,pp, 7b-12b, for relevant parts) These Treasury regulations inter alia support the aforesaid statutes without qualification. nie During 1978,petitioner's two stepsons were minors (See Stip.(6),App.A,infra,p, 33a),and were members of his household for almost that entire year.(See Stip. (7),App.A, infra, p, 33a.) During 1978,petitioner provided more than half of his stepsons' support. (See Stip. (8) ,App.A,infra,p,33a.) (The record shows 77% of theirtotal support. It also shows that petitioner was the only person in the household who had any income or assets during 1978.) Petitioner was neither a party to the divorce agreement or separation agreement between Judy(Stackel)Schneier-his wife in 1978-uor personally knew of his wife or her ex-husband prior to 1976; nor was aware of the terms of their divorce or sep- aration agreement prior to the deficiency notice he received from the respondent in May,1981. (See Stip.(12)App.A,infra,p,aa) 2. On May 14, 1981, petitioner received alt a BEST AVAILABLE COPY em ee eee eee) ee ae ee en eee a deficiency notice from respondent in the amount of $523 resulting from respondent's disallowance of the dependency exemptions for his two stepsons. Petitioner notified respondent that he had relied on his stat- utory and regulatory right and privilege to claim his stepsons as dependency exemp- tions,since he complied with all of the requirements of the aforesaid statutes and regulations. The respondent was adamant in his stand,basing his position on the fact that the father of the children had taken the children as his dependent exemp- tions in accordance with the law. 3. Petitioner filed a timely petition for a hearing in the United States Tax Court under 26 USCA 7442 which was granted. On April 4,1983, the hearing date,petitioner moved for a motion for summary judgment in accordance with FRCP Rule 56,together with supporting affidavits and documents show- ing there was no genuine issue as to any Sn eT Cp ptt ee * Vmiy, | Ph ee wai As ‘ eee Ce - ML ai) > A ree ‘ > — ¥-=4P 1 qi as 7 > ev 4 ‘+c i] Cf \ al = » rs, q = i . é ¥ & e x Fe) > * rs 7 war o 28 piety Ni ~ f , an a fs 1 mes mT = Pane ¥ 7 ~ ~a a, _ . 5 ed n i ¢ ae . ’ PP LS ' & nnd - Pes - > el. : - = fp 2 oe (-_ == se 4 ‘ % - tx a, 1 ed ) o i% 4 » — : : > al : bd : bd a ae : > Pre ees L- s M hd a oe | oars 7} —~ - “ > Let oh A * el ah athe — _ Pci ices —— material fact and,therefore,the petitioner was entitled to a judgment as a matter of law. The court instructed respondent to respond to the motion and scheduled the parties to appear in court on April 7,1983. On that date,the court suggested that the petitioner withdraw his motion for summa- ry judgment since there were "no factual issues in the case; that (it was) strictly a question of law"; and that "there really (wasn't) any advantage to disposing of the motion for summary judgment."' (quoted from transcript of court proceedings on April 7,1983.) After a conference in chambers, petitioner reluctantly agreed to withdraw his motion for summary judgment provided that all documents supporting the motion were made part of the record. The Court agreed to admit those documents as peti- tioner's memorandum and brief in support of petitioner's position. (quoting from transcript of proceedings on April 7,1983.) x. «es ead. i I Me bbe ete i. ai a a k | 5 4 : b - 4. Respondent and petitioner,before com- mencement of the proceedings,had entered into stipulation of the facts, (See App.A, infra,pp,3)a-35a),which were made part of the record. 3/ 5. The Tax Court found for respondent holding that "a spouse who files a joint tax return with a custodial spouse is bound by the provisions of (remedial) subsection 26 CFR 152(e)",~ and that its holding "did not result in an arbitrary and capri- cious classification.” (See App.A,infra, p.17a). Both the respondent and the Tax "a Court referred to the instant case as, case of first impression.’’(quote from trial transcript.) 3. (See Appendix A,infra,p.p,/4a-29a) 4. (See Appendix B,infra,p.p,3b-4b for relevant sections) Subsection 152(e) provides, inter-alia, for divorced parents to agree between themselves who will claim the children as dependency exemptions. > The Tax Court rendered its final decision on July 6,1983 ordering petition- er to satisfy the $523.00 tax delttcteding 6. On April 12,1983,petitioner filed a timely notice of appeal from the Tax Court decision,which notice was entered by that court on April 15,1983. The United States Court of Appeals noted jurisdiction under 28 USCA 1291 and petitioner's opening brief was timely filed on September 23, 1983. In addition,petitioner filed a time- ly reply brief on December 12,1983,to re- spondent's delayed brief. Oral argument was scheduled and heard on June 6,1984. The Ninth Circuit Court of Appeals handed down its decision on June 15,1984 s/ re- viewing the tax court's legal conclusions de novo. (App.A,infra,p,2a.) It concluded that the tax court correctly upheld the Commissioner's disallowance of petition- er's dependent exemptions and deficiency 5. See Appendix A, p, IVa. 6. See Appendix A, pp,/!.a-(da. -8- 4 , ‘ % 4 5 assessment. (App.A, infra,p,{a—(0a. The main support for the Ninth Cir- cuit's conclusion was Revenue Ruling 78-91 crem-acass), °™ ten which respondent makes it forever impossible for a step- father to claim his stepchildren as de- pendency caiuaasidha ahs though he meets all of the statutory and regulatory re- quirements to do so,-if that stepfather happens to marry a divorced woman with children,which divorced woman previously agreed,in writing,to permit her former husband to claim the children as his de- pendency exemptions;even if the stepfa- ther is neither aware of that agreement until he receives his deficiency notice from respondent,nor knew the parties at 7. See Appendix A,infra,pp,S(a)-7(a). 8. See Appendix B,infra, p,13b Revenue Ruling 78-91,inter alia, mandates that all support provided by a stepfather shall be treated as coming from his wife,the mother of his stepchildren. Pn a Ses en HEA NS hoa Sah OTe stl ni ee the time they signed their agreement. (See App.A, infra, p, 34a.) Respondent,in effect,establishes a classification of stepfathers and then, in effect,repeals their statutory and regulatory right and privilege to take their stepchildren as dependent exemptions, even though they completely comply with the requirements Congress mandated. In so deciding, the Ninth Circuit completely disregarded,and did not even refer to the legislative history of the remedial legislation in the Senate 10 and House Reports which expressly and unequivocally excludes from applicability of remedial subsection 26 USCA 152(e) all ‘third persons who provide more than half of a child's support during the 10. Senate Report No. 488, (Finance Com- mittee) ,Aug.3,1967{To accompany H.R. 6056] (Pub. L.90-78) ,90th Cong.) lst Sess.(1967) (See App.B,infra,pp,l4b- 15b for relevant parts). 11. House Report No.102,90th Cong.lst Sess. (1967)1967-2C.B.590-594(See App.B,infra, p,t§ b for relevant parts.) «t6- 12/ taxable year. The Ninth Circuit also completely disregarded,and did not mention, Treasury Regulation 1.152-4(a) which excludes third persons who provide more than half of a dependent's support from being affected by remedial subsection 152(e). (See App. B, infra, p,10b.) Additionally, in so~deciding, the Ninth Circuit evaded the gravamen require- ment of remedial subsection 152(e) and Treasury Regulation 1.152-4(a),i.e.,that both the custodial and noncustodial par- ent must show that either,or both of them combined,have provided more than half of their children's support during the tax- able year before the noncustodial spouse will be entitled to the benefits of reme- 13/ dial section 152(e) (2) (a). IZ. See Senate Report No.488,Part ITT, par.l (App.B,infra,pp.14b-15b) See House Report No.102,Part ITT, par.l (App.B,infra, p,15b.) 13. See App. B, infra, p,3b. atte a we ole BR tt Me. iS oe el cae ee, 7. Petitioner timely filed a petition for rehearing and suggestion for rehearing en banc on June 25, 1984, which was denied by the Ninth Circuit on July 31, 1984. Petitioner then filed a timely motion for a stay of mandate pending timely applica- tion for writ of certiorari. The Ninth Circuit issued an order staying mandate on August 14,1984 for a period of 90 days from the date of the order,pending timely application for writ of certiorari within that time B /// /// /// /// /// IG. See App. A, infra, p,lla-/24. 15. See App. A, infra, pJ3a. 22. ae Oh ae REASONS FOR GRANTING PETITION Although this Court has shown a re- luctance to grant certiorari in federal tax cases in the absence of a clear con- flict of decisions between the court of appeals for two circuits,it has,neverthe- less made exceptions where the cause meets any of the following tests: a.-where a showing is made that substan- tial numbers of taxpayers are affected” b.-where there is a "clear-cut mistake of law" in the decision of the court iin c.-where there are "questions of law,deci- sion of which is unembarrassed by any disputed question of fact or any neces- sity to draw an inference of fact from 3/ basic findings." 17 See ,e.g.United States v. Chicago,B & oR. Co. 412 U.S. os obson v. Commissioner, 320 U.S.489, 3/ Trust of Bingham v.Comm'r, 325,U.S. 365,371 (1944) atte d.-The Court has "frequently reexamined, as matters of law,determinations by (the courts below) of the meaning of the words of a statute as applied to facts found by (those courts.)" e.-The Court has granted certiorari when the decisions of the courts below de- parts from or conflicts with the prin- ciples laid down in prior decisions of the Court. 2/ ARGUMENT Petitioner's cause meets all five of these tests: a.-Countless numbers of stepfathers,simi- larly situated to the petitioner,are in danger of having their dependency exemptions disallowed for prior years, if the decision of the court of appeals is allowed to stand. 47 Trust of Bingham v. Comm'r, 325 U.S. 365, 371 (1944) 5/ See e.g., Trust of Bingham v.Comm'r, 325 U.S. 365,371(1944) othe b.-In the instant case,the court of appeals has made a clear-cut mistake of law by denying petitioner a specific,unequivocal, vested statutory and regulatory right and privilege constitutionally granted by the Congress,which right and priv- ilege have not been directly or indi- rectly repealed by the Congress as of December 31,1983,and have existed for Ned pe Ep EN ASA e taba AED dC a SL asi more than half a century. Neither has Congress ever directly (or indirectly) made that right and privilege con- tingent upon any other person or sec- tion of the Internal Revenue Code. c.-The court of appeals has stipulated that "there are no disputed issues of fact. The cause involves pure ques- tions of law not related to any factual issues. All factual issues having any bearing on the questions of law have 67 Opinion by Court of Appeals for the Ninth Circuit (See Appendix A,infra,p, 43) -15- ; i] } | i { ; 7/ been stipulated to by respondent. — d.-The court of appeals has misinterpret- ed or disregarded words, or not given words their ordinary meaning in the legislative history, the ee and regulations ee and has at- tempted to "wrench meanings from the words which literally..they do not beam e.-The Court of Appeals for the Ninth Cir- cuit has decided the federal questions of law involved in this cause in a way in conflict with 52 applicable decisions of the Supreme Court of the United 77 See Stipulations of Facts (App. A, Infra, pp,3la-35a. ) 8/ Senate Report No.488,Part III, 90th Congress 1967 (See App. B infra,pp,14b-15b. House Report No. 102, Part III, 90th Congress 1967 (See App. B, supra, p,l5b.) 9/ 26USCA 151(a) (e) (1) (3), (See App.B, infra,p,lb) 26USCA 152(a) (2)or (9). (See App.B,infra, p,2b). 10/ 26CFR 1.151- -l1(a)(b),3(a) (See App.B, infra,p,8b); 26CRF 1. 152- -l1(a) (2) (i) (b)C€ ) (See App. B,infra, pp,9b-10b 11/ Crooks v. Harrelson, 282 U.S. 55,60 (1930). inthe States contained in (1) Petitioner's Brief in Support of Petitioner's Posi- tion which the United States Tax Court made part of the record and forwarded Same to the Court of Appeals for the Ninth Circuit; (2) Petitioner's Open- ing Brief; (3) Petitioner's Reply Brief; and (4) Petitioner's Petition ; 7 for Rehearing and Suggestion for Re- ; hearing en Banc. This Court has grant- ed certiorari when a lower federal court disregards the principles laid . down in prior Supreme Court dectatoos™ Respondent Commissioner,by virtue of his stipulations,concedes that petitioner De at Vee ia Di st CN yh meets all of the requirement of the afore- mentioned statutory and regulatory scheme to claim his stepchildren as dependency exemptions but that remedial section Cin D id aaNet AN init Dai ta Nii Raise rant 12/ Trust of Bingham v. gone Ei + - > - oF = | | 13/ 152 (e)(2)(A) + authorizes their father to claim them as his dependents for 1978. Respondent's self-serving response to petitioner's position that the legis- — history of the remedial ue Tm ~~ and Treasury Regulation 1.152-4(a) excluded any "third person” from the appli- cability of the remedial--legislation was that petitioner was not a "true third par- ey.” 18/ Respondent ,however,offered no evidence whatsoever to support that state- ment and the entire record is likewise barren. 137 See App.B, infra, pp,3b. Subsection 152(e)(2)(A) authorizes the non- custodial spouse to claim his children as dependent deductions if he has a written agreement with his ex-wife to that effect and if he contributes at least $600 to- wards the support of each child during the calendar year.This subsection,however,is not triggered unless he or his wife,or both provide more than half of the chil- dren's support for the taxable year. (Sub- section 152(e)(1)(A). 14/ See App B. infra, Part ITI, 14b-15b and Part Ill, 15b. 15/ See App. B, infra, 10b. I6/ Trial Transcript, page 31. -18- The United States Tax Court's re- sponse to the ‘third party' exclusion was that "while Congress did indicate that section 152(e) was not to apply where a "third party’ contributes over one-half of the child's support,...there is no in- dication that Congress intended a "third party” to include a stepparent under the = 17/ instant factual situation." , 18 The Tax Court paid mere lip aie OD 19 to Treasury Regulation 26 CFR 1.152-4(a) which is on point and restates the legis- lative history's exclusion of ‘third per- sons’ from the applicability of remedial section 152(e). 177 App. A, infra, p.26(a)-27(a). I8/ See App. A, infra, 19a-20a T5/ See App. B, infra, p.10b 26CFR 1.152-4a states in relevant part: Thus, section 152(e) and this section do not apply if a person other than the par- ents provides one-half or more for the sup- port of such child during the calendar year. (emphasis added. The words “such child" refers to "Children of Divorced Parents,"which is part of the title of the legislative history of the Act. (See App.B,infra,p.15b.) Petitioner believes that Congress' inclusion of the requirement in remedial subsection 152(e)(1) (A) 20) nat either the non-custodial or the custodial spouse,or both, show that they provided more than half of the childrens’ support before the non-custodial spouse can reach the benefits of subsection 1$2(0)(2) (a) proves that Congress intended to continue the uniform- ity of the common requirement for all de- pendency deductions, i.e., that any person who claims a dependency exemption must provide more than half of the dependent's support during the taxable year. Addition- ally, the fact that Congress did not dis- turb the then existing statutory scheme giving stepfathers the right and privilege to take their stepchildren as dependent deductions if they meet all of the requi- rements, (which the respondent stipulated 207 App. B, infra, p. 3b. 21/ See note 13, supra. -20. the petitioner did),is overpowering evi- dence of Congress' interition to include stepfathers as ‘third persons' to be ex- cluded from the applicability of remedial section 152(e). Petitioner brings to the Court's at- tention that the Court of Appeals for the Ninth Circuit neither mentioned the ‘third person’ exclusion in the legislative his- tory and in the Treasury Regulation, nor addressed the possible significance of that exclusion to the instant case. This glaring omission was pointed out to the Ninth Circuit by the petitioner in his Petition for Rehearing and Suggestion for Rehearing en Banc. Petitioner pointed out all during the proceedings, and in his briefs and peti- tion for rehearing, that the Tax Court had overruled the respondent Commissioner in a case involving a grandfather who had also been disallowed dependency exemptions for -21- 22/ his two grandchildren. The respondent based his disallowance on the same ground as in the instant case, e.g., that there was a written agreement between the di- vorced parents (the ex-wife was the grand- father's daughter),permitting the non- custodial spouse to take the children as his dependency deductions. Notwithstanding that agreement, the Tax Court ruled that the grandfather was a "third person' excluded from the applica- bility of remedial section 152(e) enacted in 1967,since he had provided more than half of the grandchildren's support and that they had lived under his roof with their mother for more than half the cal- endar year. A similar result denying the divorced 23/ 24 mother or the divorced father depend- ency deductions was reached by the Tax 22/Nathaniel R.Winslow Jr.v.Commissioner 30 TCM 769 (1971-184) 23/Helen M.Lutter v.C.1I.R.61TC685 (1974) 24/Joseph R.Fisher v.C.1.R.Sec.78,492-PH,TC. -22- *“@E¥Fe) Court in cases involving the provision of more than half of the children's support by a state welfare agency. These two cases were also similarly placed on the record by the petitioner. All three cases were disregarded and not even mentioned by the Tax Court or the Ninth Circuit in their opinions. These three cases,graphically demon- Strate that the Tax Court recognizes that "third persons' can be excluded from being affected by remedial section 152(e),if they provide more than half of the di- vorced children's support,irrespective of the claims of the father or the mother or any written agreement between them. It begs common sense to suppose that Congress had grandparents and welfare agencies in mind when it excluded ‘third persons' from the applicability of the remedial statute instead of the most ob- vious,numerous group of 'third persons’, atte i.e., stepfathers. In an effort to explain to the Tax Court and the Court of Appeals for the Ninth Circuit the reason why Congress gave this narrow relief to the respondent in 1967,petitioner placed on the record 1982 statistics by the United States Bureau of Census which showed that 4,214,000 homes were headed by single parent,divorced wom- en,up from 1,727,000 in 1970,an astound- ing increase of 2,487,000 homes headed by divorced women. The respondent was aware of this grow- ing pheonomenon in 1966 when he asked Con- gress for relief in curbing the number of anticipated tax cases between divorced par- ents.Congress granted the limited relief requested,e.g.,relief from cases between divorced parents,but not for cases between a divorced woman with children,who re- marries and the new spouse stepfather can prove that he provides more than half of 2h his stepchildren's support,-as would any other person who claims a dependency ex- emption. Congress,therefore,made it crystal clear in the legislative history,and by retaining the dependency exemption for stepchildren that the relief it was grant- ing only applied as between divorced par- ents and not to any other person who pro- vided more than half of a child's support. The Secretary of the Treasury, likewise, adopted regulations to that effect This Court addressed this very issue of Congress’ intent concerning a tax — 26 ute in New Colonial Ice Co. v. Helvering — when it stated: Had there been a purpose, (by the Congress) to depart from the general policy...and to make the right to deduction transferable or available to others than the taxpayer...it is but reasonable to believe that pur- Se would have been clearly express- = (Emphasis added.) 26/ 292 U.S. 435, 441 (1933) ite 257 CFR 26 Section 1.152-4(a)(see note 9,supra Congress’ silence in the legislative history,in not specifically excluding step- fathers from the class of ‘third persons' who were not to be affected by the remedial legisiation,is a deafening reaffirmation of stepfathers' dependency exemption rights and privileges. Both respondent and the Tax Court were required to give the words- in Congress’ stated exclusion of ‘third persons’ from applicability of remedial subsection 152(e) + their ordinary mean- ing. As ee stated in Crane v. Commissioner. (t] he words of statutes including revenue acts-should be interpreted where possible in their ordinary, everyday senses. This Court went even further in lay- ing down principles to apply to the con- struction of words in a gee Fim Old 8 Colony R. Co. v. Commissioner when it ordered: 277 331 U.S. 1,6 (1946) 28/ 284 U.S. 552,560 (1931) ~-26 th. either spouse can spend his earnings as he/ she sees fit. (Of course spousal support must be provided.) Also,the Tax Court ruled that state community property laws cannot be used to deny a federal taxpayer of rights and privileges Congress has be- 50/ stowed on him. In Morgan v. Commissioner _ the Court stated: [r}¢ it is found in a given case that an interest or right created by local law was the object intended to be tax- ed,the federal law must prevail no matter what the name is given to the interest or right by state law. (emphasis baaee} The Court nannansncea: ¥ that po- 5 sition in Burmet v. Harmel. _ Here we are concerned only with the meaning and application of a stat- ute enacted by Congress,in the exer- cise of its plenary power under the Constitution,to tax income. The ex- ertion of that power is not subject to state control... (the will of the Congress) is to be interpreted so as to pive a _un*form apelLication to a nationwide scheme of taxation. (emphasis added.) 507 309 U.S. 78,81(1939) 51/ 287 U.S. 103, 110 (1932) & 52/ In a later case, Lyeth v. Hoey, the Court declared on point: (tT Ihe question as to the construction of the exemption in the federal stat- ute is not determined by local Law. (emphasis added. ) Petioner has quoted the above three cases relating to the Community property issue, (there are many others) ,because the Court of Appeals for the Ninth Circuit stated in its conclusion that it had not reached the issue,"whether half the sup- port provided by (petitioner) should be attributed to (petitioner's then wife) / 53 under California's community property laws.” The Court of Appeals for the Ninth Circuit then attempted to surmount the fatal say by relying on Revenue Ruling 54 78-91 ~—=to support 53/ See App.A,infra,p.a. 54/ (1978- 1CB36) See oo B,infra,p. /3b. Rev.Rul. 78-91 states in relevant parts: The support Fumasehed be | the new spouse will be treate? o6 sh nae by the di- vorced (custodial #3} ; pouse for Dur oses of section 8302) (4) n determining whether (Footnote continues on next page) ~38- 55/ its opinion, notwithstanding the fact that this court has given little weight to the respondent's revenue rulings,especially if they did not carry out the Congressional intent or conflicted with the overall stat- utory and regulatory scheme. The Court has stated that position consistently and without sacegtiin. In 56/ Commissioner v. Idaho Power Co. the Court declared: (A revenue ruling) fi}s a legal opin- ion within the agency,not a Regula- tion or Treasury Decision. It is with- out force when it conflicts with an Act of Congress. Here, Revenue Rule 78-91 conflicts with 26 USCA 151(a)(e)(1)(3) and 152(a) (2) or (9) and makes it forever impossible for petitioner and stepfathers similarly sit- uated to claim their stepchildren as de- pendent deductions,even though they can prove that they provided more than half of areyts conte ribbte ed over eit of ns eRITe* Ss support or the cal “h dar year. 55/ See App.A,infra 5a-Ja 56/ 418 U.S. 1 22 (1995) o9D their support during the taxyear in ques- tion. This Court has ruled that the Commis- sioner "goes beyond routine and exceeds his statutory power" when he promulgates a revenue ruling interpreting a Treasury regulation. 1) Revenue Ruling 78-91 con- flicts 7" applicable Treasury Regula- tions. In Rowan Cos. v. United States the Court struck down a Treasury Regulation. (to which it traditionally gives much weight.) The Court held the regulation invalid because it "fail(edy' to implement the Congressional mandate , a consistent 59 and reasonable manner." _ In this case, Rev. Rul. 78-91 fails to implement in a reasonable manner the Congressional mandate in the legislative 577 See e. Bartels v.Birmingham, 332 U.S. 126- -132(194 6) an ecurity Bd.v. BET ene -" “ 5B 1/15i- “is ); ,2(a)(b), (a) T1538 -1(a) (1), (29 (1), (b), (c) ;1.152-4a. 59/ 452 U.S. 247,253 (1980) 40- history of remedial section 152(e) to ex- clude ‘third persons’ from its applicabi- lity. To the contrary,Rev.Rul.78-91 frus- trates the Congressional mandate and makes it impossible for ‘third person' step- fathers,similarly situated to the peti- tioner, from enjoying the dependency ex~ emptions granted by the Congress. Revenue Ruling 78-91 does violence to the statutory and regulatory dependent ex- emption scheme and destroys the uniform- ity of the threshhold requirement for all taxpayers who claim dependent deductions, e.g., that the claimant must show he pro- vided more than half of the dependent's Support during the calendar year. This Court has determined that "re- venue rulings provide little aid in inter- preting a tax statute. Helvering v. New 60/ York Trust Co., 292 U.S. 455,467-468(1933)."! 607 Biddle v. Commissioner, 302 U.S. 41. Opposite to that determination is the Ninth Circuit's view that revenue rulings can"aid the court's interpretation of the dependency exemptions in the instant case by pointing out the trend of opinion "Te 61 administrators familiar with tax laws!" The self-serving interests of the respondent Commissioner,to enable him to achieve an impermissible purpose for the sake of administrative convenience ,does ‘not commend him as an impartial,objective source of the "trend of opinion among administrators. " This Court has asserted that any regulation (or revenue ruling) which attempts to disallow a deduction is nec- cessarily invalid. $2/ Even the Tax Court has placed little reliance on revenue rulings.In Estate of a) App.A,infra,p,&@. See e. 8 Trust of Bingham v. Comm'r 325 U.S.36 377(1944)and cases cited therer it. Late ‘f pee Be Mises F stat mee faa i ae b : + Re a ess a as : eters: ence le Oy car Ey Pe eee Tet A Oe SE a peers eee ee a . aul ae ‘ ae : ; } is | ine ~8 x Par : | | mak) : i a 7 fr i ” & 7 ) _ , m ne yrs - aa iw . , Ls “BOA Bare Aw Riggtera ee ie - - . — ; - 7 7 ‘> am ; a $ tee ee, ae L eae ye Pee ae ar ay : oy Lee at?e 6. FY =" ee , et “FoF LcLE a Baek, te aie 7 ae ae : ion - ae ede a F fa i By Pay aics ee & a an a) ; = i ry ' A Ns PS ose Ag PA regulations,as heretofore pointed out,as well as the intent of the Congress,as ex- pressed in the legislative history of re- medial section 152(e). It is a serious and unconstitutional encroachment on the Article I, Section 8(1) plenary taxing powers of the Congress. Rev.Rul.78-91,in effect ,impermissibly establishes 2 class- ifications of stepfathers, e.g.: (1) Stepfathers who have married divorced women with children,which divorced wom- en have no written agreements with their ex-husbands permitting them to take the children as dependency ex- emptions. Such stepfathers can take their stepchildren as dependent de- ductions. (2) Stepfathers who have married divorced (Footnote from previous page) Hutcheson stated that a revenue ruling had "no more binding or legal force than the opinion of any other lawyer." hh ; women with children who have such agreements. Such stepfathers,because of Rev.Rul.78-9l1,can never take their stepchildren as dependent deductions since Rev.Ruling 78-91, states that they have provided no support at all, whereas,in fact,they may have actual- ly provide more than half of the sup- port. Petitioner believes that Rev. Rul. 78-91 unconstitutionally deprives him,and countless others similarly situated,of the property they have gained, (i.e. ,tax benefits),in the good-faith exercise of a specific ,unequivocel,vested right and privilege granted by the Congress in the exercise of its Article I Section 8(1) plenary taxing powers. Such an unwarranted deprivation of property appears to be a violation of petitioner's Fifth Amendment guarantee to due process and equal pro- tection of the laws. -46 - This Court addressed such a denial by a governmental agency of rights and benefits granted by the Congress to a class of citizens in Jiminez v. Weinberger 66/ by stating: [r] Jo conclusively deny or.e subclass enefits presumptively available to the other denies the former of the equal protection of the laws guar- anteed by the due process provisions of the Fifth Amendment. It should be remembered tnat it is not the Congress making these classifica- tions,but a governmental agency. The pe- titioner is well-aware that tax benefits are a matter of legislative grace and not a right. However,petitioner maintains that only the Congress can repeal a right and privilege it has granted,and not the re- spondent Commissioner. This Court has often admonished exec- utive agencies not to encroach on the leg- islative powers of Congress. In 667 GIT U.S. 628, 94 S.Ct.2496(1974) ob Fa Manhattan Gen. Equip.Co. v. Commissioner, o// this Court clearly laid down the prin- ciple to be followed by administrative agencies: The power of an administrative officer or board to administer a federal statute and to prescribe rules and regulations to that end is not the power to make law-for no such power can be delegated by Congress...A regulation which does not do this,but operates to create a rule out of harmony with the statute is a mere nullity. Petitioner asserts that Rev.Rul. 78-91 is a rule "out of harmony" with the entire statutory and regulatory dependency exemp- tion scheme,including remedial section 152(e) and prays that this Court will de- clare it to be a “nullity”. This blatant attempt by the respondent to circumvent federal tax statutes and Treasury regula- tions through the stratagem of a revenue ruling should be dealt with in an appro- priate manner. 677 297 U.S. 129,134 (1936) =48~ Diligent research by petitioner,a third year law school student,has not revealed a similar example of an executive agency of the federal government attempt- ing to thwart Congressional statutes and Treasury Regulations by the stratagem of a revenue ruling,-which establishes class- ifications of citizens, causing them to be deprived of property gained from the good-faith exercise of a clear and un- ambiguous,vested right and privilege,con- stitutionally granted by the Congress,and upon which they justifiably relied. Petitioner prays that this honorable Court will respond to respondent's uncon- Stitutional legislative act,as well as the sanctioning of that act by a United States Court of Appeals for the Ninth Cir- cuit. The impact of the Ninth Circuit's decision in the instant case extends far beyond harm to the petitioner, and count- less others similarly situated. Nor are =49 the harmful consequences of that court's decision confined to the tax area. If allowed to stand,the decision below will have a far-reaching impact in the conduct of ail agency rulemaking proceedings un- der 5 USCA 8 553. In a subsequent case, Greene v. Mc 68 / Elroy, the court cautioned that: [without explicit action by law- makers,decisions of Constitutional import and effect would be relegated by default to administrators,who, under our system of government are not endowed with authority to decide them. The Opinion of the Court of Appeals for the Ninth Circuit in the instant cause must be judged as an attempt to provide a veneer of respectability to an obvious un- constitutional encroachment by the respon- dent on the Article I, Section 8(1) (18) taxing powers of the Congress. When the Ninth Circuit upheld and sanctioned Revenue Ruling 78-91 it, in 687 360 U.S. 474,507 (1959). 7 -50- effect,also usurped Congress' plenary power to lay and collect taxes thus grievously violating the Doctrine of Separation of Powers,so deeply ingrained in our politi« cal and judicial system. The Court of Appeals for the Ninth Circuit has,by its decision,authorized the establishment of classifications of tax- payers resulting from respondent's pro- mulgation and enforcement of Rev.Rul. 78-91, and the deprivation of petitioner's,and numerous other taxpayers',property gained from availing themselves of tax benefits granted in the Internal Revenue Code. Petitioner contends that Rev.Rul.78- 91,is unconstitutional on its face and as applied to petitioner,and should have been struck down by the Court of Appeals for the Ninth Circuit,and the respondent Com- missioner directed to the Congress for any relief he felt necessary and appropriate under the circumstances. ye This Court has set the course for lower courts to follow when the respondent Commissioner seeks a federal court's as- sistance to accomplish a purpose which on- ly the Congress can provide. 9/ In United States v. Byrum this Court declared on point: Courts properly have been reluctant to depart from interpretation of tax law which has been generally accept- ed when the departure could have far- reachirp consequences. When a princi- ple of taxation requires examination, Congress is better equipped than a court to define precisely the type of conduct which results in tax conse- quences. (emphasis added. ) The Court of Appeals for the Ninth Circuit demonstrated that it adhered to this Court's directive in Byrum, supra, when it “eo in a recent case; C.I.R. v. 70 Greenspun. {(w)hen_ a principle of taxati - quires examination,Congress is better equipped than a court to define pre- cisely the type of conduct which re- sults in tax consequences. (emph.add.) 697 408 U.S. 125,135 (1972) 70/ 670 F.2d 123,126 (1982) o$2~ Petitioner believes it is reasonable to ask why the Ninth Circuit did not sim- ilarly direct respondent to the Congress in the instant cause? Certainly,the peti- tioner's clear and unambiguous vested right and privilege under the Internal Revenue Code merited such action by the Ninth Circuit-especially since Congress had never directly or indirectly repealed the long-standing dependency benefits. Cer- tainly,there were "far-reaching conse- quences” involved here and Congress was better equipped than the court to modify a tax benefit that had been so deeply en- trenched in the dependency exemption sche- me. The court should not have taken it upon itself to sanction the establishment of a classification of taxpayers and to uphold the deprivation of benefits flow- ing from that classification. If the Ninth Circuit's judicial ac- tion was taken for the administrative -53- convenience of the respondent,then it would have been in contravention of the following principles laid down by this 71/ Court in Frontiero v. Richardson: {wlhen we enter the realm of "strict judicial scrutiny;' there can be no doubt that “administrative conve- nience” is not a shibboleth,the mere recitation of which dictates consti- tutionality. Stanley y.Illinois. 72/ This Court also reflected in a case many years ago: Clearly,if the federal courts give way to the "seductive call of ex- pediency”urged by administrators for the sake of administrative con- venience,then surely the vital guar- antees of our Constitution and rights and privileges granted by the Congress will be reduced to nothing more than a "form of words.” 73/ It may be true that this case only involves $523.00 plus interest and is being litigated by only a pro se (albeit a third year law school student),but the issue involved is of paramount importance 7, 690-691 (1972) 717 GIl U.S. 67 77/ 405 U.S. 645,656 (1972) 73/ See e.g. Silverthorne Lumber Co. v. ~~ United States, 251 U.S. 385,392 (1919). sh. because a federal court of appeals was being asked to decide whether an executive agency could make tax law,or decide tax benefits,or repeal of tax benefits. Another dimension has been recently added to this cause,which indeed makes it a case of first impression. Finally,seven- teen years after the enactment of remedial 152(e),the respondent Commissioner-no doubt fearing that petitioner would probably pre- vail in the instant case because his posi- tion was legally correct-decided to do what he should have done in the first in- stance: e.g.,go to the Congress for any assistance he deemed necessary and appro- priate. Congress,at the request of respon- dent Commissioner,has just enacted the Tax Reform Act of 1984,Public Law 98-369,ef- fective January 1,1985.- Section 423 of that Act, amends remedial section 747 See App.B,infra,pp.5b-"b. -55- 152(e). The new section 152(e)(5) provides what the Commissioner tried to unconstitu- tionally accomplish by the device of Rev. Rul. 78-91 in 1978, This new subparagraph conclusively proves the position that the petitioner has advanced throughout these proceedings: e.g.,that in 1978 he had a statutory and regulatory right and privilege to take his stepsons as dependent exemptions. Those rights and privileges have and will exist until January 1,1985. For the first time since 1967,when the remedial statute was enacted,Congress has seen fit to set up two classifications of stepfathers: e.g.,some who will be able to claim de- pendent exemptions for their stepchildren and countless others who will not. There 75/7 See App.B,infra p.1b Section 152(e)(5) now provides: (5)Special Rule For Support Received From New Spouse of Parent-For purposes of this subsection,in case of the remarriage of a parent , support of a child received from parent ’s spouse shall be treated as re- ceived from the parent. -56- bs city . a ‘' . . _ , exsre. * & ‘ . a - tae * 7 ‘ is ¥ = ——. o~ = ’ ‘ ayn ~ ; ° . 4 " : : 4 bh. Tee ce. ¢ ) COMMISSIONER OF ) 8277-82 ) INTERNAL REVENUE, ) ORDER STAY- ) ) ) an Before: WRIGHT, Circuit Judge. The appellant's motion is granted. The issuance of mandate will be stayed for 90 days from the date of filing of this order,pending timely application for writ of certiorari within that time. 13 (a) SERVED JUL 5 1983 T.C. MEMO. 1983-390 UNITED STATES TAX COURT MAX SCHNEIER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 8277-82. Filed July 5,1983. Max Schneier, Pro se. Darren M. Larsen, for the respondent. MEMORANDUM FINDINGS OF FACT AND OPINION DAWSON, Judge: This case was assigned to and heard by Special Trial Judge Darrell D. Hallett pursuant to the provisions of section 7456(c) of the Internal Revenue Code oe Rules 180 and 181,Tax Court 2 Rules of Practice and Procedure. The L All section references are to the Inter- nal Revenue Code of 1954,as amended,unless otherwise indicated. 2 Pursuant to the order of assignment,on the authority of the "otherwise provided" language of Rule 182, Tax Court Rules of Practice and Procedure,the post-trial pro- cedures set forth in that rule are not _applicable in this case. 14 (a) Court agrees with and adopts his opinion which is set forth below. OPINION OF THE SPECIAL TRIAL JUDGE HALLETT, Special Trial Judge: Respondent determined a deficiency in petitioner's 1978 Federal income tax in the amount of $523. The issue for decision is whether a mother and stepfather having custody of children by the mother's former marriage may claim dependency exemptions on their joint return for the children where more than one-half of the support is provided from earnings: of the stepfather but the noncustodial father contributed more than $600 support and the separation agreement between the noncustodial father and mother provided that the noncustodial father would be entitled to the exemptions. Most of the relevant facts have been stipulated and are found accordingly. Petitioner was a resident of Marina Del Ray, California, at the time the 15 (a) ; petition was filed in this case. During the tax year 1978 petitioner and Judy Schneier were married and had custody of two children of Judy Schneier from her former marriage with Mr.Stackel. The separation agreement entered into between Mr.Stackel and Mrs.Schneier in- cident to their divorce provided that Mr. Stackel would be entitled to dependency exemptions for the two children provided he made the $400 monthly support payments required by the agreement. During 1978, Mr.Stackel complied with the terms of the separation agreement concerning support and he made payments amounting to $5,600 for the support of the two children. The amount of support provided by the petitioner for the two children during 1978 was more than one-half of their total support for the year. Petitioner was not a party to the divorce or the separation agreement bet- ween Mr.Stackel and Mrs.Schneier, and he 16(a) did not know of the terms of their divorce or separation agreement prior to May 1981. On their joint Federal income tax re- turn for the year 1978, petitioner and Mrs. Schneier claimed dependency exempt- ions for the two children. Mr.Stackel claimed exemptions on his 1978 returm for the two children as well. Respondent determined that Mr.Stackel is,and peti- tioner and Judy Schneier are not, enti- tle to the exemptions mee. We agree with respondent. Petitioner relies upon the provisions of section 15l(e) and section 152(a) (2) in support of his claim to entitlement for the exemptions. These sections permit an exemption for a stepchild of the tax- payer if the taxpayer contributes over one half of the stepchild's support. Since it z Although the notice of deficiency in this case,because it relates to the joint return filed by petitioner and Judy Schneier,was issued to the two of then, only petitioner filed a petition in response to the notice. 17(a) has been stipulated that over one-half of the support for the two children involved here was received from petitioner, and since there is no dispute that the chil- dren were his stepchildren during the taxable year 1978,petitioner contends that he meets all of the requirements of the statutes. However, respondent relies upon section 152(e) for the position that for purposes of section 152(a), Mr. Stackel is to be treated as if he contributed over one-half of the children's support such that he,and not petitioner, is entitled to the exemptions. Section 152(e)(1) provides that if a "child" receives over one-half of his support from his divorced or legally separated "parents" and the child is in the custody of one or more of his parents for more than one-half of the year,then, unless section 152(e)(2) applies, the child shall be treated as having received 18 (a) over one-half of his support from the parent having custody the greater portion of the year. Section 152(e)(2) provides that the child referred to in section 152(e)(1) shall be treated as having re- ceived over one-half of his support from the parent not having custody if a di- vorce decree or a written agreement pro- vides that the noncustodial parent shall be entitled to the exemption,and that parent provides at least $600 support for the child during the year. Respondent argues that because the separation agreement between Mr.Stackel and Mrs.Schneier provided that Mr.Stackel was to have the benefit of the dependency exemptions for the two children,and Mr. Stackel paid more than $600 support for them,he, and not petitioner,is entitled to the exemptions. A threshold requirement for the ap- plicability of the special rules provided 19(a) by section 152(e) in the case of divorced parents is that the parents must provide over one-half of the child's support. Thus,if more than one-half of the support is provided by a third party,section 152 (e) has no applicability and the general rules of section 151 and section 152 de- termine whether a taxpayer is entitled to the exemption. Hopkins v. Commissioner, 55 T.C. 538, 540-541 (1970) ;section 1.152- 4(a), Income Tax Regs. Petitioner contends that we should consider the exemptions for his two stepsons as having been claimed by him as a "third party" not precluded under section 152(e)(2) from doing so by the separation agreement involving Mr. Stackel and Mrs. Schneier. However,in the first instance, petition- er overlooks the fact that it is not he, as an individual taxpaying unit separate and distinct from Mrs.Schnier, who claimed the exemptions on the returm in question. 20 (a) ~ Rather,the exemptions were claimed on a joint return filed by petitioner and Mrs. Scnneier. It has long been held that in come and deductions reported on a joint returm are to be treated as having been reported by husband and wife together filing as a single taxable unit. Taft v. Helvering, 311 U.S.195 (1940); United States v. Allen, 551 F. 2d 208 (8th Cir. 1977). Thus, petitioner cannot so convenient- ly frame the dependency exemption question in terms of his relationship to the chil- dren and the amount of support that he provided for them. The exemptions in issue were claimed by a single taxpaying unit of which Mrs.Schneier was as much a part as petitioner. Viewing the situation in this light, we conclude that the pro= visions of section 152(e) prohibit peti- tioner and Mrs.Schneier from claiming the exemptions on the joint return they filed. 21(a) Admittedly,section 152(e) is not clear on its face as to its applicability to the precise situation involved in this case. The "special rule" of section 152(e) (2) which allows the exemption to the non- custodial spouse applies to the "child" of "parents" described in section 152(e) (1). Section 152(e) (1) avclics if a "child" (as defined in section 15l(e)(3)) receives over one-half of his support during the year "from his parents who are divorced or legally separated***.'"' On the one hand,a stepfather would appear to be included within the scope of section 152 (e)(1),since that section refers to sec- tion 15l1(e)(3) for the definition of the term "child," and section 151l(e)(3) de- fines a "child" to include a stepson or stepdaughter of a taxpayer. However, the 'bhild" referred to in section 152(e) (1) is further described in that section as an individual receiving over one-half of 22 (a) his support from his parents "who are legally separated or divorced." Arguably, the description of persons included as "parents" would exclude a stepfather who is not a party to the divorce proceedings and who provided over one-half of the support for the child. ~-* - However, we think section 152(e) (1) and (2) should be interpreted to pre- clude a natural parent and her spouse filing a joint return from claiming the exemption for a child where the non- custodial parent is otherwise entitled to the exemption under section 152(e) (2). In this situation, the single taxable unit oe Respondent reached the same conclusion in Rev. Rul. 78-91,1978-1 C.B. 36. Ge- nerally, revenue rulings are not entitled to the weight of Treasury Regulations,and / will be set aside if they amount to an unreasonable nrg ge prong of the statute involved. Estate of Lan . Commissioner, 64 T.C. 40 cf in part and reversed in part, 613 F. 2d 770 (9th Cir. 1980). 23 (a) comprised of the natural parent and her spouse filing the joint return should be considered "parents" bound by the pro- visions of section 152(e). In reaching this conclusion,we are particularly mindful of the legislative purpose behind the enactment of the spe- cial provisions of section 152(e). In this respect,before the section was enact- ed,considerable controversy and uncertain- ty was generated over the issues as to the total support provided by each parent. To alleviate that situation,Congress pro- vided,with the enactment of section 152(e), that the parents could decide and agree at the time of their divorce who was to have the dependency exemptions, and that their straightforward agreement on the matter would control for tax purposes. > We have reached no conclusion as to the result in this case if petitioner had filed a separate return. 24 (a) See Colton v. Commissioner, 56 T.C. 471, 473-474 (1971); Sheeley v. Commissioner, 59 T.C.531,534 (1973). In light of this legislative purpose,we concluded in Colton that the noncustodial parent was entitled to dependency exemptions and his ex-wife was not even though the noncustodial parent's support contribution could be viewed as having been derived from com- munity earnings of him and his new spouse such that his "individual" contribution, if community property rules were appli- cable in interpreting section 152(e), would be less than the $600 minimum re- quired by the statute. We stated in Colton v. Commissioner, supra at 475: KKK (The application of community pro- perty laws] would introduce a whole new set of complexities - the neces- sity for distinguishing community from separate property - and would thus frustrate the congressional quest for simplicity and certainty. An interpretation so completely at variance with a declared legislative purpose should not be adopted unless required by the plain terms of the 25 (a) statute. (citations omitted]. Likewise,the interpretation of thes statute sought by petitioner in this case would clearly frustrate congressional in- tent. It would involve the necessity for tracing the relative contribution to the support of a child made by the custodial parent and the spouse of that parent to determine whether the noncustodial parent otherwise entitled to the exemption by reason of his agreement with the custodial parent is so entitled. While Congress did indicate that section 152(e) was not to apply where a "third party" contributes 6 : For example,although respondent stip- ulated in this case that petitioner pro- vided over one-half of the children's Support,it appears that the support pro- vided came from community earnings of petitioner and Mrs.Schneier, While peti- tioner relies upon Colton v.Commissioner, 56 T.C.472,473-474(19/71) ,for the notion that community property rules should be disregarded in determining his support contribution,if petitioner,unlike the petitioner in Colton,were to be treated as true "third party" having no obligation to support the children,his argument that one-half of the support derived from "his" earnings should not be attributed to Mrs. Schneier is of doubtful merit. 26 (a) over one-half of the child's support (see H. Rept. No. 102, 90th Cong., lst Sess.1 (1967), 1967-2 C.B. 590-594; S. Rept. No. 488, to accompany H.R. 6056 (Pub. L.90-78), 90th Cong., lst Sess.(1967), reprinted in 1967 U.S. Code Cong. & Adm.News, 1527, 1529), there is no indication that Cong- ress intended a "third party" to include a stepparent under the instant factual situation. Moreover,we think it was clear- ly foreseeable by Congress that divorced Spouses reaching agreement as to the mat- ter of exemptions would remarry,and it is unreasonable to conclude that Congress intended that the certainty which it otherwise sought to provide by the stat- ute would be completely upset by - marriage of the custodial spouse. See 7 See Reynolds v. Commissioner, T.C. Memo. 1980-6; O'Brien v. Commissioner, T.C. Memo. 1975-329. 27 (a) footnote 5, supra. Finally, we reject petitioner's vari- ous constitutional arguments that our interpretation of section 152(e),which denies petitioner the benefit of exemp- tions for the two children because of an agreement to which petitioner was not a party,is invalid. Anetn pactertonee con- veniently overlooks the fact that he elected to file a joint retum with his spouse,and by doing so presumably obtain- ed the benefits of joint retum rates. He now seeks to cast the exemption question in terms of whether "he",individually, has been deprived of entitlement to the exemptions which were in fact claimed on a joint returm. In any event,deductions, including dependency exemptions,are mat- ters of legislative grace which Congress has been given great leeway in condition- ing, limiting,and denying. Labay v. Com- missioner, 55 T.C. 6, 14 (1970), affd. 28 (a) 450 F.2d 280 (Sth Cir.1971). Particularly in view of the congressional purpose to inject certainty into an area of law that was fraught with controversy,we do not believe our holding that a spouse who files a joint return with a custodial spouse is bound by the provisions of section 152(e) results in an arbitrary and capricious classification. Decision will be entered for the respondent. 29 (a) UNITED STATES TAX COURT WASHINGTON, D. C. 20217 MAX SCHNEIER, ) Petitioner ) Vv. ) Docket No. ) 8277-82 COMMISSIONER OF ) INTERNAL REVENUE, Respondent. DECISION Pursuant to the determination of the Court, as set forth in its Memorandum Findings of Fact and Opinion T.C. Memo. 1983-390 filed on July 5, 1983, it is ORDERED AND DECIDED: That there is a Federal income tax deficiency due from petitioner for the year 1978 in the amount of $523.00. (signed) Howard A.Dawson,Jr. Chief Judge Entered: JUL 6 1983 Form 50 Rev. Apr. 1970 30(a) ——————————= lll UNITED STATES TAX COURT MAX SCHNEIER, ) Petitioner, Vv. Docket No.8277-82 COMMISSIONER OF INTERNAL REVENUE, Respondent. - STIPULATION OF FACTS In accordance with Tax Court Rule 91(e), the below-signed parties agree to this stipulation of facts pursuant to the gen- eral terms of this preable,unless specif- ically expressed otherwise in this stip- ulation. All stipulated facts shall be considered authentic. All copies shall be treated as if originals. Any relevancy objection may be made with respect to all Or any part of this stipulation at the time of submission,but all other evident- iary objections are waived unless specif- cally expressed within this stipulation. 1. Petitioner Max Schneier's legal 31(a) residence is now,and was at tl'2 date of the filing of the petition herein,4150 Via Dolce, # 224, Marinal del Rey, California 90291. 2. Attached hereto as Joint Exhibit 1-A is a copy of the federal income tax return of the petitioner for the taxable year 1978. 3. Attached hereto as Joint Exhibit 2-B is a complete copy of the statutory notice of deficiency upon which notice this case is based. 4. The sole issue in this case is whether petitioner is entitled to claim dependency exemptions for his two step- children for whom he contributed over 50% of their support,during 1978,in light of the fact that petitioner's wife's former husband claimed the exemptions pursuant to their written separation agreement. 5. Max Schneier and Judy (Stackel) Schneier were legally married during 32 (a) the year of 1978. 6. Dean Stackel aged 14,and Gregory Stackel, aged 11, were the natural chil- dren of Judy (Stackel) Stneter. 7. Judy Schneier and Dean and Gregory Stackel resided with Max Schneier for al- most the entire year of 1978 at 1436 Ca- pri Drive, Pacific Palisades,CA 90272; and that Dean and Gregory were members of my household as defined in Section 152(a) (9) in that year. 8. The amount of support provided by Max Schneier for Dean and Gregory Stackel during 1978 was more than half of their total support for that year. 9. Attached hereto as Joint Exhibit 3-C is a copy of the pertinent portions of the separation agreement entered into in 1972 by Judy Schneier and her former husband, Stephen Stackel. 10. Stephen Stackel complied with the terms of the agreement by paying child 33 (a) support throughout 1978. The total amount of support provided by Stephen Stackel for his sons Dean & Gregory Stackel during 1978 was approximately between $5,000.00 to $6,000.00. 11. Stepehn Stackel claimed Dean and Gregory Stackel as dependents on his 1978 tax return. 12. Max Schneier is not a party to the divorce or separation agreement between Judy (Stackel) Schneier and Stephen Stackel. Max Schneier did not know per- sonally,or know of Stephen Stackel or Judy {tackel prior to 1976 and was not aware of the terms of the divorce or separation agreement prior to the letter he received from the I.R.S.on May 14,1981. KENNETH W.GIDEON Chief Counsel Intermal Revenue Service 34 (a) eee Rew Ge at ee O.Greaves J H 0.G District Counsel 300 No.Los Angeles St, P.O. Box 2031,Main P.O. Los Angeles, CA 90053 Tel. No. (213) 688-6311 Date: April 4, 1983 (signed) Max Schneier Max Schneier Petitioner Date: April 4, 1983 35 (a) APPENDIX B FEDERAL STATUTES INVOLVED (Relevant Parts) 26 USCA 151 Part V—Deductions For Personal Exemptions Sec, I51. Allowance of deductions for personal exemptions 152. Dependent defined. § 151. Allowance of deductions for personal exemptions (a) Allowance of deductions.—In the case of an individual,the exemptions pro- vided by this section shall be allowed as deductions in computing taxable income. e) Additional exemption for dependents.— (1) In general.—An exemption of $1,000 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 $1,000,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. (3) Child defined.—For purposes of paragraph (1)(B),the term "child" means an individual who (within the meaning of section 152) is a son, stepson, daughter, or stepdaughter of the taxpayer. 1(b) 26 USCA 152 § 152. Dependent defined (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 tax- payer begins,was received from the tax- payer (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, (2) A stepson or stepdaughter of the taxpayer, (3) A brother,sister,stepbrother, or stepsister of the taxpayer, (4) The father or mother of the tax- payer,or an ancestor of either, (5) A stepfather or stepmother of the taxpayer, (6) A son or daughter of a brother or sister of the taxpayer, (7) A brother or sister of the father or mother of the taxpayer, (8) A son-in-law,daughter-in-law, father-in-law ,mother-in-law,brother-in- law,or sister-in-law of the taxpayer,or (9) An individual (other than an individual who at any time during the taxable year was the spouse,determined without regard to section 143,of the taxpayer) who,for the taxable year of the taxpayer,has as his principal place of abode the home of the taxpayer and is a member of the taxpayer's household. (b) Rules relating to general definition. — For purposes of this section— (3) The term "dependent" does not include any individual who is not a citizen or national of the United States. (5) An individual is not a menwer of the taxpayer's household if at any time during the taxable year of the taxpayer 2(b) 26 USCA 152 (cont.) the relationship between such indivi- dual and the taxpayer is in violation of local law (e) Support test in case of child of divorced parents,etc.— (1) General rule.—If— (A) a child (as defined in sec- tion 15l1(e)(3)) receives over half of his support during the calendar year from his parents who are di- vorced or legally 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 the 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 ee (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 agree- ment 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 sec- tion 151 for such child, and 3(b) 26 USC 152 (cont.) (11) such parent not having custody provides at least $600 for the support of such child during the calendar year, or (5) Regulations.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection. 26 USCA 6013 ~ 26 8 6013 Joint returns of income tax by husband and wife (a) Joint returns.—A husband and wife may make a single return jointly of income taxes under subtitle A, even though one of the spouses has neither gross income nor deductions,except as provided below: (d) Special rules.--For purposes of this section— (3) if a joint return is made,the tax shall be computed on the aggregate in- come and the liability with respect to the tax shall be joint and several. (e) (2) Special rules.— (A) the determination of the spouse to who items of gross in- come (other than gross income from property) are attributable shall be made without regard to community property laws gg agg eg, ng, iy i, lg, i i i es, a ig ag i ee ee 4(b) TAX REFORM ACT OF 1984 PUBLIC LAW 98-369 (effective January 1,1985) Sec. 423. DEPENDENCY EXEMPTION IN THE CASE OF CHILD OF DIVORCED PARENTS, ETC. (a) GENERAL RULE.—Subsection (e) of section 152 (relating to support test in case of child of divorced parents,etc.) is amended to read as follows: "(c) SUPPORT TEST IN CASE OF CHILD OF DIVORCED PARENTS, ETC.— - "(1) CUSTODIAL PARENT GETS EXEMPTION. — Except as otherwise provided in this subsection,if— "(A) a child (as defined in section 15l (e)(3)receives over half of his support during the calendar year from his par- ents=— "(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 cal- endar year, 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 sub- section (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 5 (b) TAX REFORM ACT OF 1984 (cont. ) over half of his support during a calen- dar year from the noncustodial parent if— "(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by reg- ulations prescribe) that such custo- dial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and "(B) the noncustodial parent attach- es 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 w who is not the custodial parent. "(3) EXCEPTION FOR MULTIPLE SUPPORT AGREEMENT.—This subsection shall not apply in any case where over half of the support of the child is treated as having been received rom a taxpayer under the provisions of subsection (c). "(4) EXCEPTION FOR CERTAIN PRE-1985 INSTRUMENTS. — "(A) IN GENERAL.—A child of parents described in paragraph (1) shall be treat- ed as having received over half his sup- port during a calendar year from the non- custodial parent if— | "(i) a qualified pre-1985 instrument between the parents applicable to the taxable year beginning in such calendar year provides that the noncustodial parent shall be entitled to any deduct- ion allowable under section 151 for such child, and "ii) the noncustodial parent provides at least $600 for the support of such child during such calendar year. For purposes of this subparagraph,amounts 6 (b) TAX REFORM ACT OF 1984 (cont.) expended for the support of a child or children shall be treated as received from the noncustodial parent to the ex- tent that such parent provided amounts for such support. "(B) QUALIFIED PRE-1985 INSTRUMENT. — For purposes of this paragraph, the term "qualified pre-1985 instrument means any decree of divorce or separate maintenance or written agreement— "(i)which is executed before Janu- ary 1,1985. r "(ii)which on such date contains the provision described in subpara- graph (A) (i),and "(iii)which is not modified on or after such date in a modification which expressly provides that this paragraph shall not apply to such decree or agreement. "(5) SPECIAL RULE FOR SUPPORT RECEIVED FROM NEW SPOUSE OF PARENT.—For purposes of this subsection,in the case of the re- marriage of a parent, support of a child received from the parent's spouse shall be treated as received from the parent. "(6) CROSS REFERENCE. — "For provision treating child as dependent of both parents for purposes of medical expense deduction,see section 213 (dk4) ." tag, Phi gy, eg, gy, “ig, Mg, ey he, Mg, gg, ig gy i, gy yy, ly ey, ly, yy ag a a a a ey, Tg, ng iy, ey, 7 (b) TREASURY REGULATIONS INVOLVED (Relevant Parts) 26 CFR 1.151 DEDUCTIONS FOR PERSONAL EXEMPTIONS §1.151-1 Deductions for personal exemp- tions. (a) In general. (1) In computing tax- able income,an individual is allowed a deduction for the exemptions specified in section 151. Such exemptions are: (iv) the exemptions for dependents or the taxpayer. §1.151-2 Additional exemptions for de- pendents. (a) Section 15l(e) allows to a tax- payer an exemption for each dependent (as defined in section 152) whose gross income (as defined in section 61) for the calendar year in which the taxable year of the taxpayer begins is less than the amount provided in section 151l(e) (1) (A) applicable to the taxable year of the taxpayer,or who is a child of the tax- payer. (b) The only exemption allowec. for a dependent of the taxpayer is tha pro- vided by section l5il(e). §1.151-3 Definitions (a) Child. For purposes of sections 151(e),152 and the regulations there- under, the term "child" means a son, step- son, daughter, stepdaughter. 8 (b) 26 CFR 1.152-1 General definition of a dependent. a)(1)For purposes of the income taxes im- posed on individuals by chapter 1 of the Code,the term "dependent" means any indivi- dual described in —— (1) through(10) of section 152(a)over half of whose support, for the calendar year in which the taxable year of the taxpayer begins,was received from the taxpayer. 2) 4) For purposes of determining whether Or not an individual received,for a given calendar year,over half of his support from the taxpayer,there shall be taken into ac- count the amount of support received from the taxpayer as compared to the entire am- ount of support which the individual re- ceived from all sources,including support which the individual himself supplied... Section 152(a)(9)applies to any indi- vidual other than an individual who at any time during the taxable year was the spouse, determined without regard to section 153,of the taxpayer)who lives with the taxpayer and is a member of the taxpayer's household during the entire taxable year of the tax- payer.An individual is not a member of the taxpayer's household if at any time during the taxable year of the taxpayer the rela- tionship between such individual and the taxpayer is in violation of local law.It is not necessary under section 152(a)(9) that the dependent be related to the taxpayer... It is necessary,however,that the taxpayer both maintain and occupy the household... c) In the case of a child of the taxpayer w is under 19 or who is a student,the tax- payer a claim the dependency exemption fa such child provided he has furnished more than onechals of the support of such child for the calendar year in which the taxable year of the taxpayer begins,even though the income of the child for such calendar year may be equal to or in excess of the amount 9(b) determined pursuant to §1.151-2 applicable to such calendar year.In such a case there may be two exemptions claimed for the child: One on the parent's (or stepparent's) re- turn, and one on the child's return. 26 CFR 1.152-2 (d) In the case of a joint return it is not necessary that the prescribed relationship exist between the person claimed as a de- pendent and the spouse who furnishes the support; it is sufficient if the prescribed relationship exists with respect to either spouse. §1.152-4 Support test in case of child of divorced or separated parents. (a) Applicability.For taxable years begin- ing after December 31,1966,the provisions ofsection 152(e)and this section relate to a determination of which of separated par- ents (that is parents who are divorcéd or legally separated under a decree of di- vorce or separate maintenance,or separated under a written separation agreement)is to be treated for purposes of section 152(a) and §1.152-1 as having provided more than half of the support of a child,as defined in section 15l(e)and this section to apply either parent or both parents combined must provide more than one-half of the child's total support,within the meaning of $1.152-1(a)(2)(i) during the calendar year in which the taxable year of the parent who is claiming the child as a dependent begins; and such child must be in the custody of one or both of his parents for more than one-half of the calendar year. Thus,section 152(e) and this section do not apply if a erson other than the parents provides one- Fatt Or more for the support of such child during the calendar year or has custody of the child for cae? or more of the cal- endar year...(Emphasis added.) 10(b) §1.152-4 (d) Exceptions—(1) In general. Notwithstanding paragraph (c) of this section, a child shall be treated as re- ae over half of his support during the calendar year from the parent who is not the custodial parent (hereinafter referred to as the "noncustodial parent") if the conditions of subparagraph (2) ...-Of this paragraph are met. (2) Decree or agreement. A non- custodial parent who provides at least $600 for the support of a child during the calendar year shall be.treated as having provided more than half of the support of the child if the decree of divorce or of separate maintenance or a written agreement between the parents applicable to the taxable year of the noncustodial parent beginning in such calendar year,provides that the noncusto- dial parent shall be entitled to any de- duction allowable under section 151 as an exemption for the dependent child... §1.6013-1 Joint returns. (a) In general (1) A husband and wife may elect to make a joint returm under section 6013(a) even though one of the spouses has no gross income or deductions. For rules for determining whether indivi- duals occupy the status of husband and wife for purposes of filing a joint re- turm,see paragraph (a) of §1.6013-4. §1.6013-4 Applicable rules. (a) Status as husband and wife. For the purpose of filing a joint returm un- der section 6013, the status as husband and wife of two individuals having tax- able years beginning on the same day shall be determined: 11(b) §1.6013-4(cont. ) (1) If the taxable year of each indi- vidual is the same,as of the close of such year; and (b) Computation of income,deductions, and tax. If a joint return is made, the gross income and adjusted gross income of husband and wife on the joint returm are computed in an aggregate amount and the deductions allowed and the taxable income are likewise computed on an aggre- gate basis...Although there are two tax- payers on a joint return,there is only one taxable income. The tax on the joint return shall be computed on the aggregate income and the liability with respect to the tax shall be joint and several. §1.6013-5 Spouse relieved of liability in certain cases (c) Community property laws. The de- termination of the spouse to whom items of gross income (other than gross income from property) are attributable shall be made without regard to any applicable community property laws. /// a lg, lg, a ng i a i se aa, ay a ey a i a i i i 12 (b) REVENUE RULING INVOLVED (RELEVANT PART) Revenue Ruling 78-91 (1 CB. 36 (1978) Children of divorced parents; support provided by custodial parent's new spouse. Support provided for the children of di- vorced parents by the custodial parent's new spouse will be attributed to the cus- todial parent in determining whether the divorced parents contributed over half the children's support during the calen- dar year for purposes of section 152(e) of the Code. If the divorced parents to- gether provided over half the support,the noncustodial parent will be entitled to the dependency exemptions if a decree of divorce or written agreement so provides and the noncustodial parent contributed at least $600 for the support of each child for the year. Rev.Rul.73-175 am- plied. /// a i a i i eg a i a i Tg al ig a i, gg ig, Rg i i i ly i i ya, ne Sg a a ng ng a i ig ON lig Ng tng, ey, la 13 (b) LEGISLATIVE HISTORY INVOLVED (RELEVANT PARTS) SENATE REPORT NO. 488 (1967) INTERNAL REVENUE—EXEMPTIONS INTERNAL REVENUE@TAX EXEMPTIONS— DIVORCED PARENTS P.L. 90-78,see page 210 House Report (Ways and Means Committee) No. 102, Mar. 8, 1967 [To accompany H.R. 6056] Senate Report (Finance Committee) No.488, Aug.3, 1967 [To accompany H.R. 6056] Cong.Record Vo.113 (1967) III. GENERAL EXPLANATION OF THE BILL The bill provides specific rules for determining which of separated parents is to be entitled to the deduction for per- sonal exemption with respect to their children. These new rules apply where the parents are divorced or legally separated under a written separation agreement. (In this respect,your committee made a tech- nical amendment to the bill to make it clear that the new rules are to be appli- cable in all situations involving parents who are separated under a written separa- tion agreement. Under the language used tc accomplish this result in the bill as passed by the House,it seems likely that some of these situations would not have been covered.) The new rules apply with respect to a child only if the parents together furnish more than one-half of his support for a year,and only if the child is in the custody of his parents 14 (b) Senate Report No. 488 - III. (cont. ) for more than one half of the year. Thus, the new rules do not appl where a third erson contributes TET or more of the support of the child or where the child is a the custody of a person other than his parents for one-half of the year or more. vEnphasis added. ) HOUSE REPORT NO, 102 (1967) (H.R. 6056]* INCOME TAX SUPPORT TEST IN CASE OF CHIL- DREN OF DIVORCED PARENTS (House of Representatives Report No. 102, Ninetieth Congress, First Session (March 8, 1967] (RELEVANT PART) IIl. GENERAL EXPLANATION OF THE BILL The bill provides specific rules for determining which of separated parents is to be entitled to the deduction for personal exemption with respect to their children. These new rules apply where the parents are divorced or legally separated under a decree of divorce or of separate maintenance or are separated under a writ- ten separation agreement. They apply with respect to a child only if the parents to~ gether furnish more than one-half of his support for a year,and only if the child is in the custody of his parents for more than one-half of the year. Thus the new rules do not apply where a third person contributes one-ha or more ot the Sup- Ort of the child or where the child is in the custod of a person other than his parents for one-halt of the year or more. (Emphasis added. ) 15 (b) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1732%3A1. Public record. Not legal advice.