This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).





In re the Marriage of:
Michelle L. Hall, petitioner,


Steven M. Hall,



Filed December 18, 2007

Affirmed; motion granted

Dietzen, Judge


Brown County District Court

File No. FA-05-544


Roger H. Hippert, Nierengarten & Hippert, Ltd., P.O. Box 214, New Ulm, MN 56073 (for respondent)


Carolyn L. Huffer, Huffer Law Office, 621 Fourth Street, P.O. Box 460, Nicollet, MN 56074 (for appellant)  


            Considered and decided by Dietzen, Presiding Judge; Ross, Judge; and Harten, Judge.*


U N P U B L I S H E D   O P I N I O N


            In this marital-dissolution proceeding, appellant husband challenges the district court order awarding the federal income tax exemptions for the parties’ three minor children to respondent wife, arguing that the district court erred on the grounds that appellant has the greater income and contributes a greater amount of money to the children’s support.  Because the district court properly applied the law and did not abuse its discretion, we affirm.


            The parties were married in June 1992 and had three children during the marriage.  The marriage was dissolved by judgment and decree filed in October 2006.  The judgment was based on a marital termination agreement executed by the parties that resolved all issues between the parties except the division of some personal property and the determination of which party was entitled to the federal income tax exemptions for the three children. 

The district court found that respondent Michelle L. Hall is employed as a special-education teacher with a net monthly income of $2,044, and appellant Steven M. Hall is employed by 3M Company with a net monthly income of $5,637.  Respondent estimated her monthly living expenses, including the children, at $5,147; appellant estimated his monthly living expenses at $5,263, including his child support payments.  The district court calculated child support, in accordance with the child support guidelines, at $1,973 per month.  The parties were awarded joint legal custody, and respondent was awarded sole physical custody of the children.  Appellant was also ordered to provide health and dental insurance for the children.

            Following submissions from the parties, the district court filed its findings of fact, conclusions of law, and order, which, among other things, determined that respondent was entitled to claim the children as dependents for purposes of calculating federal income tax exemptions.  The district court concluded that “[f]ederal law presumptively awards the dependency tax exemptions to the custodial parent,” which in this case is respondent, and that appellant “has not demonstrated sufficient justification for the Court to depart from the presumption.”  This appeal follows.



Appellant argues that the district court should have awarded the dependency exemptions to him because he has the greater income and contributes a greater amount of money to the children’s support.  “The allocation of federal-tax exemptions is within the trial court’s discretion.”  Ludwigson v. Ludwigson, 642 N.W.2d 441, 449 (Minn. App. 2002).  We review the district court’s order to determine whether the court abused its discretion.  Id.  Factual findings “shall not be set aside unless clearly erroneous,” but legal conclusions are reviewed de novo.  Minn. R. Civ. P. 52.01; Morton Bldgs., Inc. v. Comm’r of Revenue, 488 N.W.2d 254, 257 (Minn. 1992).

Upon the dissolution of a marriage, federal tax law presumes that the custodial parent is entitled to claim the child as a dependant for tax purposes.  I.R.C. § 152(a), (e) (2006).  The supreme court has recognized that this presumption is not conclusive; a district court may, at its discretion, “allocat[e] tax dependency exemptions to a noncustodial parent incident to the determination of child support and physical custody” provided that the district court finds such allocation is in the best interests of the child.  Rogers v. Rogers, 622 N.W.2d 813, 823 (Minn. 2001).  In exercising its discretion, the district court may also consider the relative resources of the parties and the financial benefits that will accrue from such a transfer.  Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. App. 1998), review denied (Minn. Feb. 18, 1999).

The district court found that both parents are working and would financially benefit from the exemptions; that respondent’s income is substantially less than appellant’s and respondent has fewer financial resources than appellant; and that appellant had not demonstrated that the children would benefit appreciably by the awarding of the exemptions to him.  The district court concluded that appellant was not entitled to the exemptions because he had not established that awarding him the exemptions was in the best interests of the children.

Appellant contends that because he has a greater income than respondent and his contribution to the support of the children is greater than respondent’s total net income, he is entitled to the exemptions as a matter of law.  Appellant argues that under section 152 of the Internal Revenue Code “it is the intent of Congress that the parent providing more than 50% of the support should receive the child or children as a tax dependency exemption.”  Appellant relies on several federal cases, decided between 1953 and 1977, to support his contention.  But all of these cases were decided before section 152 was amended by the Tax Reform Act of 1984, Pub. L. No. 98-369, 98 Stat. 494.  The amended statute “allocat[es] [dependency] exemptions in all cases to the custodial parent.”  Greeler v. Greeler, 368 N.W.2d 2, 5 (Minn. App. 1985).  And under the new law, “[t]he only [fact] question[] [is] which parent is the custodial parent.”  Fudenberg v. Molstad, 390 N.W.2d 19, 21 (Minn. App. 1986).  Thus, appellant’s contention that the parent providing more than half of the child’s support is entitled to the exemption—though correct in cases involving pre-amendment versions of the Internal Revenue Code—is no longer good law.

Appellant next argues that the decision of the Utah Court of Appeals in Allred v. Allred requires that we reverse the district court.  835 P.2d 974 (Utah Ct. App. 1992).  We disagree for two reasons.  First, we must follow binding precedent of our supreme court.  See State v. Ward, 580 N.W.2d 67, 74 (Minn. App. 1998) (stating “we are not in [a] position to overturn established supreme court precedent”).  Applicable Minnesota law provides that the district court award the federal exemptions in a  manner consistent with the best interests of the child.  Rogers, 622 N.W.2d at 823.    Second, the Utah appellate court in Allred concluded that a deviation from the federal presumption was justified only when the noncustodial parent has “a higher income and provide[s] the majority of support for the child” and “more importantly” properly followed the law and the transfer is “in the best interest of the child.”  835 P.2d at 978.  Here, the district court concluded that its decision was in the best interests of the children.  We see no abuse of discretion. 



            Respondent moves this court to strike portions of appellant’s appendix—labeled “appendix 5” and “appendix 6”—arguing that the challenged documents were not accepted into evidence by the district court and, therefore, are not properly part of the record on appeal.  “An appellate court may not base its decision on matters outside the record on appeal, and may not consider matters not produced and received in evidence below.”  Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988); see also Minn. R. Civ. App. P. 110.01 (defining record on appeal).  In response to the motion, appellant does not deny that the documents are outside of the record on this appeal.  Therefore, respondent’s motion to strike is granted.

            Affirmed; motion granted.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.