57 T.C. 507">*508 OPINION

The Commissioner of Internal Revenue determined a deficiency1972 U.S. Tax Ct. LEXIS 195">*197 of $ 283 in the petitioner's Federal income tax for the taxable year 1968. The petition was properly filed pursuant to section 7463 ¹ and Rule 36 of the Tax Court Rules of Practice, but on the parties' joint motion leave was granted to withdraw the case from consideration as a small tax case and to resubmit it as a fully stipulated case under Rule 30.

As petitioner does not challenge the Commissioner's disallowance of claimed deductions for certain employee business expenses incurred as a salesman for LaSalle Extension University of Chicago, less than the entire amount of the deficiency is in controversy. The sole issue for our determination is whether petitioner is entitled to dependency exemptions for his two minor children.

All of facts are stipulated and are so found.

David A. Prophit is a single individual who resided in Baton Rouge, La., when the petition was filed. He filed an individual Federal income tax return1972 U.S. Tax Ct. LEXIS 195">*198 for the calendar year 1968 with the district director of internal revenue, New Orleans, La.

In September 1963 petitioner married Ursula Dahn in West Germany and resided in that country with her until their separation in April 1967. Thereupon petitioner returned to the United States. Two children, Thomas and Susanna, were born of the marriage. In June 1968 petitioner's wife obtained from a West German court a decree of divorce which provided for payments by petitioner for child support in the amounts of $ 40 per child per month commencing July 1, 1968. Ursula had custody of the children throughout 1968, and neither the children nor their mother have ever been in the United States.

In 1968 each contributor of support gave an equal amount for the support of each child. The total expended for the support of each child that year was $ 813.50: 57 T.C. 507">*509

Petitioner claimed Thomas and Susanna as dependents in his Federal income tax return for the year 1968. The children1972 U.S. Tax Ct. LEXIS 195">*199 were not claimed as dependents on any individual United States Federal income tax return for 1968 other than that filed by petitioner. The German decree of divorce had no provision concerning entitlement to a deduction under sections 151 and 152(e)(2)(A)(i).

On its facts, and under section 152(a)(1) before its amendment in 1967 which added section 152(e), ² this would be a simple case involving dependency exemptions. Here it is stipulated by the parties directly involved in this litigation that petitioner furnished more than half the support of his minor children whom he claimed as dependents. Clearly, under section 152(a)(1) before 1967 this would call for allowance of the claimed exemption, i.e., petitioner had furnished more than half of the support of his children.

1972 U.S. Tax Ct. LEXIS 195">*200 57 T.C. 507">*510 This leaves for consideration the effect of the amendment added by section 152(e) entitled "Support Test in Case of Child of Divorced Parents Et Cetera." This added section provides that children of divorced parents in the custody of the parent (in this case the wife) other than the petitioner shall be treated as dependents of the custodial parent.

This section, if applicable, apparently would deny the husband the deductions because he neither provided at least $ 600 for the support of either of his children nor $ 1,200 or more for both. Neither did the decree of divorce provide that he should be entitled to any deduction. But we are concerned with whether the agreed-on facts here necessarily call section 152(e) into play at all.

Petitioner in his pro se brief asks us to consider "the intent of the law, and not the 'letter' of it to use the words of the apostle Paul." In sum, he argues that under the law prior to January 1, 1967, he would have been entitled to the exemptions in these circumstances and that Congress did not mean a different result where it is agreed that petitioner provided more than one-half the actual support of his children. We agree.

From the legislative1972 U.S. Tax Ct. LEXIS 195">*201 history set forth in footnote ³ below and our note thereto the provisions of section 152(e) were not too long ago 57 T.C. 507">*511 incorporated in the Revenue Code to ameliorate troublesome controversies between competing taxpayers, each claiming the same dependents as exemptions. In such circumstances there is a serious question as to which claimant actually furnished more than half the support and the new section of the Code attempted to establish pragmatic rules by which such disputes could be decided.

1972 U.S. Tax Ct. LEXIS 195">*202 Certainly here there is no such controversy. Petitioner alone is claiming the exemptions. His divorced wife who had custody of the children made no such claim. The Commissioner has agreed that petitioner furnished more than half the support. In these particular circumstances we think the reasons for the enactment of section 152(e) are not present. Accordingly it is not necessary to call on its provisions to decide the case.

In so concluding we have perhaps given heed to petitioner's request that we consider his case in the words of the Apostle Paul referred to above. We assume he refers to 2 Corinthians iii: 6: "Not of the letter, but of the spirit; for the letter killeth, but the spirit giveth life."

Decision will be entered under Rule 50.

Simpson, J., concurring: With the holding of the majority, I agree, but I wish to emphasize what I understand to be the reason for so holding. Our holding that section 152(e) is not applicable is not based on the stipulation as to the support furnished by the father; it is based on the fact that only the father was claiming the deductions and on the understanding that the mother was a nonresident alien and was not even a 1972 U.S. Tax Ct. LEXIS 195">*203 potential claimant for such deductions. See secs. 871, 873, 57 T.C. 507">*512 I.R.C. 1954. Since the purpose for enacting section 152(e) was to provide a more satisfactory method of settling disputes when a dependency deduction was being claimed by both divorced parents, there is no need to apply the provision in this case. Because the mother was a nonresident alien who, so far as we understand, did not receive any income with respect to which dependency deductions would be allowable, she was not even a potential claimant for such deductions. Indeed, if section 152(e) were applied to this situation, the effect would be that no one would be entitled to the dependency deductions for the children. Thus, we hold that when there are not two potential claimants to a dependency deduction, section 152(e) is not applicable. In so holding, we take no position as to whether, when both divorced parents are potential claimants to the deduction, there may be circumstances under which section 152(e) is inapplicable.

Tannenwald, J., dissenting: I think the majority decision flies in the face of section 152(e). That language expressly states that where a child receives over one-half of1972 U.S. Tax Ct. LEXIS 195">*204 his support from his parents, who are legally divorced or separated under a decree or written separation agreement, and such child is in the custody of one or both parents "such child shall be treated, for 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" (emphasis added), unless the other parent meets certain specified conditions. It is undisputed that petitioner did not satisfy those conditions. I do not think it is possible to deal with this case under section 152(a) without regard to the express language of section 152(e). Granted that the difficulties stemming from conflicting claims between parents for dependency exemptions were the generating force for legislative action, the clear mandate of section 152(e) is not limited in application to situations where a conflict exists. The fact that the petitioner and respondent have agreed on the amounts of support involved is beside the point. A third party, namely, the other spouse, is usually involved in this type of situation, albeit, in this particular case, the petitioner's former wife was a nonresident1972 U.S. Tax Ct. LEXIS 195">*205 alien during the taxable year and therefore not subject to United States tax.