Counting sheep is one thing, counting nights is quite another.  The Internal Revenue Service has just published final regulations clarifying the Counting Nights Rule, which is used to identify the custodial parent of a child whose parents are divorced, separated or living apart.  The issue is important since the custodial parent gets to take the tax exemption.  The former rule said the custodial parent is the one with whom the child resides for the greater number of nights during the calendar year.  The problem came over the definition of a night.  Is it where the child happens to be at midnight?  Is it where the child is sleeping, and for which tax year is the night of December 31 counted?  Well, the final regs provide that a child resides for a night with the parent if the child sleeps at the parent’s home.  The night is also counted if the child is with the parent at some other location, such as when they are away on vacation.  And a night that extends over two taxable years is allocated to the taxable year when the night begins.  And that’s the last word on nights which, for the IRS, is all in a day’s work.

THIS IS NEIL CHAYET LOOKING AT THE LAW™

IRS Final Regulations Published July 2, 2008, U.S. Law Week, Vol. 77, No. 2, Pg. 2028, 7-8-08

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