Internal Revenue Service
Revenue Ruling
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smRev. Rul. 78-91
1978-1 C.B. 36
Sec. 151
Sec. 152
IRS Headnote
Children of divorced parents; support provided by custodial parent's new spouse. Support provided for the children of divorced parents by the custodial parent's new spouse will be attributed to the custodial parent in determining whether the divorced parents contributed over half the children's support during the calendar year for purposes of section 152(e) of the Code. If the divorced parents together 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 amplified.
Full Text
Rev. Rul. 78-91
Advice has been requested whether the special support test provisions under section 152(e) of the Internal Revenue Code of 1954 are applicable for the children of divorced parents, under the circumstances described below, in order to determine which parent is entitled to the dependency exemption deductions for the children.
A and B are the divorced parents of three children, who were in the custody of B for the entire calendar year of 1977. The decree of divorce provided that A would be allowed to claim the exemptions of the three children as long as A made support payments of $100 a month for each child. During 1977 A made 12 payments of $300 each.
During the calendar year of 1977, the three children lived with B and B's new spouse C. B and C filed a joint Federal individual income tax return for 1977. B had no income and from C's income, B and C contributed over half of the support for the three children during 1977.
Section 151(e) of the Code allows a dependency exemption for a dependent as defined in section 152. Section 152 defines the term "dependent" as one who meets certain requirements as to citizenship, relationship to the taxpayer and receipt of support. Under section 152(a), a dependent includes a child or stepchild of a taxpayer over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer (or is treated as received from the taxpayer under subsection (c) relating to multiple support agreements or subsection (e) relating to support tests for a child of divorced or separated parents).
Section 152(e) of the Code contains the rules by which divorced or separated parents shall be treated as providing over half of a child's support if (1) over half of the child's support during the calendar year is received from the parents, and (2) the child is in the custody of one or both of the parents for more than half of the calendar year. It is important to note that the rules of section 152(e) must be applied to determine which divorced or separated parent shall be treated as providing over half the support of such child, regardless of which parent actually provided over half of such support.
Section 152(e)(1) of the Code provides the "general rule" that over half of the support of such a child during the calendar year is treated as having been received from the parent who has custody for a greater part of the year (the custodial parent) unless the circumstances place the case within the exception set forth in either section 152(e)(2)(A) or (B).
Section 152(e)(2)(A) of the Code provides that over half the support of such a child during the calendar year is considered received from the noncustodial parent if (i) the decree of divorce or of separate maintenance, or a written agreement between the parents applicable to the taxable year beginning in such calendar year, provides that the parent not having custody shall be entitled to the child's dependency exemption, and (ii) the noncustodial parent provides at least $600 for the support of such child during the calendar year.
Section 152(e)(2)(B) of the Code, as amended by the Tax Reform Act of 1976, section 2139(a), 1976-3 C.B. (Vol. 1) 408 (effective for taxable years beginning after October 4, 1976), provides that over half the support of such a child is considered received from the noncustodial parent if (i) that parent provides $1,200 or more for the support of such child (or if there is more than one such child, $1,200 or more for each of such children) for the calendar year, and (ii) the custodial parent does not clearly establish having provided more for the support of such child during the calendar year than the parent not having custody.
Thus, the parent having custody of each child for the greater part of the calendar year is treated as providing over half of the support under section 152(e)(1) of the Code, unless the child's dependency exemption is claimed under a multiple support agreement pursuant to section 152(c), or unless the circumstances bring the case within the exception set forth in either section 152(e)(2)(A) or (B).
The taxpayers in this case did not file multiple support agreements pursuant to section 152(c) of the Code so the exception for multiple support agreements does not apply. And, although the facts of the instant case come within one of the exceptions under section 152(e)(2), namely section 152(e)(2)(A), these exceptions apply only if the divorced parents meet the requirements of section 152(e)(1). Specifically, the exception under section 152(e)(2)(A) is applicable only if the divorced parents A and B provided over half of the dependents' total support for the calendar year. Even though C's income furnished more than one-half of the support for the children for the calendar year, section 152(e)(2)(A) would still be applicable if C's contribution may be attributed to B.
Rev. Rul. 73-175, 1973-1 C.B. 58, holds under the facts of that case that the support furnished by the spouse of a remarried custodial parent will be treated as being furnished by the custodial parent for purposes of section 152(e)(2)(B) of the Code. Section 152(e) was specifically enacted to alleviate the burden imposed on divorced parents and on the Internal Revenue Service by the regular support provisions in determining which divorced parent was entitled to claim the children as dependents. See H. Rep. No. 102, 90th Cong., 1st Sess. 1 (1967), 1967-2 C.B. 590-594. The objective of the section 152(e) exceptions was to allow the divorced parents to agree between themselves that the noncustodial parent could have the dependency deduction so long as that parent contributed some amount to the children's support. Congress did not intend this objective to be defeated by remarriage of the divorced parents. See discussion in Colton v. Commissioner, 56 T.C. 471, 474-475 (1971).
Under the facts of this Revenue Ruling, if the support payments provided by B and C are not treated as if they were all provided by B, taxpayers as well as the Service would have the burden of tracing the source of support payments made by the custodial parent and spouse. Because section 152 of the Code is a remedial statute, it should be given a liberal construction.
Accordingly, under the rationale set forth in Rev. Rul. 73-175, the support furnished by the new spouse C will be treated as furnished by the divorced parent B for purposes of section 152(e)(1) of the Code in determining whether the divorced parents contributed over half of the children's support for the calendar year. Furthermore, since A and B are treated as having contributed over one-half of the support of the children for 1977, it follows from the facts of this case that A is entitled to the dependency exemption deduction for the three children under the exception provided in section 152(e)(2)(A).
Rev. Rul. 73-175 is amplified.