Internal Revenue Service
Revenue Ruling
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smRev. Rul. 54-70
1954-1 C.B. 69
Sec. 151
IRS Headnote
Under the adoption statutes of Maryland and Virginia, a child is `legally adopted' for the purpose of the exemption for dependents provided by section 25(b) of the Code when the interlocutory decree of adoption is entered. The adoption statutes of Missouri, however, do not provide for an interlocutory decree and a child is not `legally adopted' within the purview of section 25(b) of the Code until the decree of adoption is entered.
Full Text
Rev. Rul. 54-70
Advice is requested relative to when, under the respective laws of Maryland, Virginia, and Missouri, a child is considered to be `legally adopted' for the purpose of the exemption for dependents provided by section 25(b) of the Internal Revenue Code.
Section 25(b)(3) of the Code provides that the term `dependent' means any person within certain specified relationships to the taxpayer, including a son or daughter of the taxpayer, over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer. Such section further provides that a `legally adopted' child of a person shall be considered a child of such person by blood.
It was stated in Burnet v. Henry Harmel , 287 U.S. 103, Ct. D. 611, C.B. XI-2, 210 (1932), that the exertion of the plenary power of Congress under the Constitution to tax income is not subject to state control. The court went on to say, `It is the will of Congress which controls, and the expression of its will in legislation, in the absence of language evidencing a different purpose, is to be interpreted so as to give a uniform application to a nation-wide scheme of taxation. * * * State law may control only when the operation of the Federal taxing act, by express language or necessary implication, makes its own operation dependent upon state law.' Congress did not define `adopted' in section 25(b)(3) of the Code except to specify that an adopted child shall be considered a child by blood. It can only be assumed that the qualification `legally' refers to the laws of the States. The Court in the Harmel case, supra , recognized that such an expressed or implied intent cannot be superseded by an administrative policy which is grounded only upon uniform application of tax law. See Davies Warehouse Company v. Bowles , 321 U.S. 144, and Estate of Henry W. Putnam et al. v. Commissioner , 324 U.S. 393, Ct. D. 1638, C.B. 1945, 345.
The pertinent provisions of the Maryland State statutes are contained in article 16 of Flack's Annotated Code of Maryland, 1951, section 85 of which provides that an interlocutory decree shall be issued granting petitioners temporary custody of the child for a limited period of time, not to exceed 1 year; the court retaining jurisdiction of the case. Section 86 provides that the legal effect of an outstanding interlocutory decree of adoption is to make the person adopted the child of the petitioner. Section 87 merely provides that the legal effect of an interlocutory order shall be confirmed and continued in the final decree.
Similarly, section 63-357 of the Code of Virginia, 1950, provides that any child adopted shall be, from and after the entry of the interlocutory order, to all intents and purposes, the child of the person or persons so adopting him.
Sections 453.020 and 453.070 of the Missouri Revised Statutes of 1949, in part, provides for the proper filing of a petition for adoption, with the appointment by the court of a guardian ad litem and an investigation of suitability. Section 453.080 provides that if the trial period of at least 9 months has been completed, a decree shall be entered making the child, for all legal intents and purposes, the child of the petitioner.
From the foregoing, it is apparent that under Maryland and Virginia statutes the effect of an outstanding interlocutory decree is a legal adoption, since the statutory `trial period' imposes parental obligations upon the adopting parents which are greater than if they were only holding the child in temporary custody as a guardian. During such period, the obligations and privileges are the same as if a final decree were entered. Under Missouri law, however, there is no legal adoption during the `trial period.' The adopting parents do not assume the full rights, privileges and obligations which are created by the issuance by a proper tribunal of an adoption decree. Indeed, the 9-month rule eliminates speedy adoption and a child is not the child of adopting parents, for all legal intents and purposes, until the 9 months' trial period has been completed and the adoption decree entered.
Accordingly, it is held that under the adoption statutes of Maryland and Virginia, a child is `legally adopted' for the purpose of the exemption for dependents provided by section 25(b) of the Code when the interlocutory decree of adoption is entered. It is further held that under the adoption statutes of Missouri, a child is not `legally adopted,' within the purview of section 25(b) of the Code, until the decree of adoption is entered, there being no provision for an interlocutory decree.