James J. Spuches - Page 3




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          subsequent section references are to the Internal Revenue Code in           
          effect for the year in issue, and all Rule references are to the            
          Tax Court Rules of Practice and Procedure.                                  
               Respondent determined a $1,458 deficiency in petitioner’s              
          2003 Federal income tax.  The issues for decision are whether               
          petitioner is entitled to a:  (1) Dependency exemption deduction;           
          and (2) child tax credit.                                                   
                                     Background                                       
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and the exhibits received into evidence            
          are incorporated herein by reference.  At the time the petition             
          was filed, petitioner resided in Sylvan Beach, New York.                    
               Petitioner and Diane E. Spuches (former spouse) obtained a             
          judgment of divorce in 1994.  Their marriage had produced two               
          daughters (the children).  In the divorce proceedings, a                    
          stipulation was entered that provided that petitioner would claim           
          both dependency exemption deductions until his former spouse was            
          employed and had incurred a tax liability.  On the happening of             
          that event, the dependency exemption deductions were to be                  
          divided between petitioner and his former spouse.  Additionally,            
          the former spouse was awarded primary custody.                              
               The former spouse’s 2003 Federal income tax return showed              
          sufficient adjusted gross income to require her to file, and she            








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