Reference: Lowe v. Commissioner, TC Memo 2016-206 & IRS Pub 504, Table 3

Since 2005, divorced parents have had to meet the “physical presence test” to claim their children as dependents.  The child must have lived with the parent for more than half of the year OR the parent who meets that test must give up his/her dependency exemption by filing Form 8332.

In this case, the mother wasn’t the custodial parent and lost the dependency exemption and child tax credit because she couldn’t prove that the child lived with her for more than half of the year as required under Code Sec 152(c).  KEEP GOOD RECORDS… and note that a “day” is counted based on where the child is at midnight.