McHUGH, Justice:

This case is before the Court upon the appeal of Mayra M. Soriano, from the final order of the Circuit Court of Pocahontas County. The appellee is Luis Soriano. For the reasons set forth in this opinion, we remand this case.

I

The appellant and appellee were married in the Dominican Republic on November 20, 1971. The parties were divorced on April 6, 1987. Three children were born of the marriage, all minors at the time of the parties' divorce.

A special commissioner was appointed in the underlying divorce action. The special commissioner recommended that the parties be granted a divorce and that the appellant be awarded custody of the three minor children.

Following a hearing in the circuit court, the parties were granted a divorce. The April 6, 1987 order granting such divorce awarded custody of the children to the appellant. This order also provided that the appellee would pay child support in the amount of $250 per month per child and that "the child exemptions and deductions for Internal Revenue Service purposes, including 1986, be granted to the Plaintiff[,]" the appellee herein.

The appellant failed to execute the appropriate documents which would allow her former husband, the appellee, to claim the children as dependents. Consequently, the circuit court, on February 6, 1989, entered an order requiring the appellant to execute the appropriate documents so as to allow the appellee to claim the dependent exemptions.

The appellant refused to execute the pertinent documents, and, consequently, the circuit court, on June 21, 1989, held that the appellant "is in contempt of the spirit of the Order of this Court entered on April 6, 1987." It is the June 21, 1989 circuit court order which is appealed in this case.

II

The narrow issue in this case is whether a trial court has the power to order a custodial parent to waive a dependent exemption for income tax purposes to which such custodial parent would otherwise be entitled pursuant to 26 U.S.C. § 152 (1988).

Before we address this issue, a brief discussion of general provisions under the Internal Revenue Code is necessary. There are three important Internal Revenue Code provisions with which we deal in addressing the issue in this case: 26 U.S.C. § 151(c)(1) (1988), which provides an exemption for each dependent of a taxpayer; 26 U.S.C. § 152(a) (1988), which sets forth the definition of "dependent"; and 26 U.S.C. § 152(e) (1988), the key provision in this case, which addresses the situation of divorced parents, and which parent in such situation may claim the dependency exemption.

A taxpayer is entitled to a personal exemption deduction for each of his or her dependents. 26 U.S.C. § 151(c)(1) (1988) provides:

(c) Additional exemption for dependents

(1) In general

An exemption of the exemption amount for each dependent (as defined in section 152) —

(A) whose gross income for the calendar year in which the taxable year of the taxpayer begins is less than the exemption amount, or

(B) who is a child of the taxpayer and who (i) has not attained the age of 19 at the close of the calendar year in which the taxable year of the taxpayer begins, or (ii) is a student who has not attained the age of 24 at the close of such calendar year.

As parenthetically noted in § 151(c)(1), 26 U.S.C. § 152 (1988) defines "dependent." Specifically, paragraph (1) of § 152(a) sets forth the following:

(a) General definition

For purposes of this subtitle, the term `dependent' means any of the following individuals over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer (or is treated under subsection (c) or (e) as received from the taxpayer):

(1) A son or daughter of the taxpayer, or a descendant of either[.]

The issue in this case squarely confronts this Court's holding in Cross v. Cross, 178 W. Va. 563, 363 S.E.2d 449 (1987). There, we held:

As an incident to awarding child support, a circuit court may allocate the federal and state income tax child dependency exemption to the non-custodial parent under IRC § 152(e), as amended in 1984, by requiring the custodial parent to execute the necessary waiver under IRC § 152(e)(2)(A) to allocate the dependency exemption to the noncustodial parent.

Id., syl. pt. 6.

26 U.S.C. § 152(e) (1988), in pertinent part, provides:

(e) Support test in case of child of divorced parents, etc.

Except as otherwise provided in this subsection, if —

(A) a child (as defined in section 151(c)(3)) receives over half of his support during the calendar year from his parents —

(i) who are divorced or legally separated under a decree of divorce or separate maintenance,

(ii) who are separated under a written separation agreement, or

(iii) who live apart at all times during the last 6 months of the calendar year, and

(B) such child is in the custody of one or both of his parents for more than one-half of the calendar year, 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 (hereinafter in this subsection referred to as the `custodial parent').

(2) Exception where custodial parent releases claim to exemption for the year

A child of parents described in paragraph (1) shall be treated as having received over half of his support during a calendar year from the non-custodial parent if —

(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and

(B) the noncustodial parent attaches such written declaration to the noncustodial parent's return for the taxable year beginning during such calendar year.

For purposes of this subsection, the term `noncustodial parent' means the parent who is not the custodial parent.

(emphasis supplied)

Prior to 1985, under 26 U.S.C. § 152(e), a child was treated as receiving over one-half of his or her support from the parent who had custody of such child for the greater part of the year; hence, the custodial parent was entitled to a personal exemption deduction for that dependent child. A "special rule" existed, however, pursuant to 26 U.S.C. § 152(e)(2), which provided that the noncustodial parent could claim the dependency exemption if: (1) the divorce decree or a written agreement between the parents provided that the noncustodial parent would claim the exemption and if the noncustodial parent provided at least $600 for the support of the child during the year; or (2) the noncustodial parent provided at least $1200 for the support of the child during the year and the custodial parent failed to clearly establish that he or she provided more support for the child than did the noncustodial parent.

As a result of the former version of this statutory provision, the Internal Revenue Service was placed in the middle of many disputes between divorced parents, both of whom contended that they were entitled to the dependency exemption for their child(ren). The costly nature of the previous version of 26 U.S.C. § 152(e) is evidenced by the legislative history of the current version:

Reasons for Change

The present rules governing the allocations of the dependency exemption are often subjective and present difficult problems of proof and substantiation. The Internal Revenue Service becomes involved in many disputes between parents who both claim the dependency exemption based on providing support over the applicable thresholds. The cost to the parties and the Government to resolve these disputes is relatively high and the Government generally has little tax revenue at stake in the outcome. The committee wishes to provide more certainty by allowing the custodial spouse the exemption unless that spouse waives his or her right to claim the exemption. Thus, dependency disputes between parents will be resolved without the involvement of the Internal Revenue Service.

H.R. Rep. No. 432, 98th Cong., 2d Sess., pt. II, reprinted in 1984 U.S. Code Cong. Admin.News 697, 1140.

As can be seen in the current version of 26 U.S.C. § 152(e) (1988), quoted above, the general rule is that a child is treated as receiving over one-half of his or her support from the custodial parent. This general rule is subject to three clear exceptions, only one of which we address in this case, specifically, where the custodial parent releases his or her claim to the exemption for a particular year pursuant to 26 U.S.C. § 152(e)(2).

As can be ascertained by a plain reading of the statute, the custodial parent will generally be entitled to the dependency exemption unless a waiver is executed. "The more difficult question is whether, as a majority of courts [which have considered the question] have held, a state trial court has the power to order a custodial parent to execute the necessary waiver in favor of the noncustodial parent." Nichols v. Tedder, 547 So.2d 766, 772 (Miss. 1989).

The appellant contends that under the sixteenth amendment to the United States Constitution, the federal government has preempted the states from exercising power in the area of federal taxation. The sixteenth amendment provides: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

We addressed this concern in Cross, pointing out that because: (1) there is no conflict between compliance with the federal and state regulations; and (2) the congressional intent of 26 U.S.C. § 152(e) is to ease the administrative burden of the Internal Revenue Service, then no preemption by federal law exists as it pertains to whether a state court may allocate a dependency exemption to the noncustodial parent. Cross, 178 W. Va. at 572-73, 363 S.E.2d at 458-59. Moreover, our research reveals that no federal court has held that a state court does not have jurisdiction over this question.

Although Cross was the first decision by a court of last resort to address the issue in this case, prior to Cross, lower courts in other states considered the question presented. See, e.g., Lincoln v. Lincoln, 155 Ariz. 272, 276, 746 P.2d 13, 17 (Ct.App. 1987), review denied (Ariz. Nov. 24, 1987); syl. pt. 1, Fudenberg v. Molstad, 390 N.W.2d 19 (Minn.Ct.App. 1986); see also Cross, 178 W. Va. at 572 n. 17, 363 S.E.2d at 458 n. 17.

Subsequent to our decision in Cross, however, other states' highest courts have decided whether a dependency exemption may be allocated. Several of these courts have followed our lead in Cross, holding that a trial court does have the power to order a custodial parent to execute the necessary waiver to allocate a dependency exemption to the noncustodial parent. Nichols v. Tedder, 547 So.2d 766, 770-80 (Miss. 1989); Fleck v. Fleck, 427 N.W.2d 355, 357-59 (N.D. 1988). Several other courts of appeal have also reached the same conclusion subsequent to Cross. See In re Marriage of Einhorn, 178 Ill. App.3d 212, 222-25, 127 Ill.Dec. 411, 417-19, 533 N.E.2d 29, 35-37 (1988); Wassif v. Wassif, 77 Md. App. 750, 759-61, 551 A.2d 935, 939-40, cert. denied, 315 Md. 692, 556 A.2d 674 (1989); Pergolski v. Pergolski, 143 Wis.2d 166, 172-73, 420 N.W.2d 414, 417 (Ct.App. 1988).

In this opinion, we reaffirm our commitment to Cross' holding, but it is necessary to articulate more specifically the circumstances under which the holding therein would apply.

As was stated in Cross, and as the Mississippi Nichols court has demonstrated by its computations, 547 So.2d at 774-75, 26 U.S.C. § 152(e) "provides an economic benefit that is of significantly greater value to a parent with income than it is to a parent without income." 178 W. Va. at 574, 363 S.E.2d at 460.

Clearly, the facts in the case now before us present a situation where equitable considerations must be addressed. It is argued by the appellant that equitable considerations should not determine the permissibility of tax deductions. This contention is also advanced by courts which have held that a state court does not have the power to allocate a dependency exemption. See, e.g., Davis v. Fair, 707 S.W.2d 711, 717 (Tex.Ct.App. 1986).

Indeed, the United States Supreme Court has stated: "The propriety of a deduction does not turn upon general equitable considerations, such as a demonstration of effective economic and practical equivalence. Rather, it `depends upon legislative grace; and only as there is clear provision therefor can any particular deduction be allowed.'" Commissioner v. National Alfalfa Dehydrating Milling Co., 417 U.S. 134, 148-49, 94 S.Ct. 2129, 2137, 40 L.Ed.2d 717, 727 (1974) (quoting New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440, 54 S.Ct. 788, 790, 78 L.Ed. 1348, 1352 (1934)).

However, we do not believe that this holding of the United States Supreme Court has any bearing on the question presented in this case. The propriety of a deduction is not at issue under the facts of this case. Rather, the issue concerns how a particular deduction will be allocated.

The appellant also contends that by amending 26 U.S.C. § 152, the United States Congress intended to remove state courts from allocating the dependency exemption. We do not agree.

26 U.S.C. § 152 (1988) is silent as to whether a state court is prohibited from allocating the dependency exemption. As we stated in Cross, "because state court allocation of dependency exemptions has been custom and usage for decades, it is more reasonable than not to infer that if Congress had intended to forbid state courts from allocating the exemption by requiring the waiver to be signed, Congress would have said so." 572 W. Va. at 178, 363 S.E.2d at 458.

Testimony by a certified public accountant before the special commissioner in this case indicated that the taxpayer with the higher income may save as much as fifty-eight cents per dollar in tax liability, while the taxpayer with the lower income may save only as little as ten cents per dollar in tax liability. This testimony, however, did not address the specific tax implications on the parties in this case. Rather, the testimony concerned tax implications in general, setting forth the highest and lowest possible tax liability savings.

As in this case, many situations are presented to trial courts where the noncustodial parent, who is paying child support, has greater income than the custodial parent. In these situations, the dependency exemption is of little to no value to the custodial parent, but it might result in greater tax liability savings to the noncustodial parent. These tax liability savings, in turn, could lead to more available funds for the support of the child.

Of course, the trial court would be responsible for determining the effect of such an allocation and should adjust the child support order accordingly. In determining the effect of allocating the dependency exemption, the trial court must ascertain what is in the best interest of the child. Just as in a contest involving custody of children, the guiding principle is the welfare of such children, see syl. pt. 4, Murredu v. Murredu, 160 W. Va. 610, 236 S.E.2d 452 (1977), so too, here, in determining the allocation of a dependency exemption, the trial court should be guided by the same principle, and this Court will not set aside the trial court's determination unless there is a clear abuse of discretion. See also syl. pt. 1, Gardner v. Gardner, 184 W. Va. 260, 400 S.E.2d 268 (1990), and syl. pt. 1, Lambert v. Miller, 178 W. Va. 224, 358 S.E.2d 785 (1987) (both holding that child support order may be modified upon showing that benefit of child requires modification and upon substantial change of circumstances).

We recognize, however, that there are situations where allocation of the dependency exemption will not achieve an equitable result, but, rather, might result in a hardship to one of the parties. Needless to point out, in these situations, the dependency exemption should not be allocated.

In a case where the dependency exemption is allocated, that is, where a trial court requires the custodial parent to execute the necessary waiver pursuant to 26 U.S.C. § 152(e)(2)(A), as amended, the trial court should set forth its reasons for doing so in the order awarding child support. These reasons should clearly demonstrate that it is more equitable to allocate the dependency exemption to the noncustodial parent than it would be to allow the custodial parent to claim the dependency exemption.

The circuit court in this case was correct in concluding that the dependency exemption could be allocated, as this conclusion is permitted by our holding in Cross. However, the record is not clear as to the specific tax implications that the circuit court's order would have on the parties. As we have held in this opinion, a trial court should set forth its reasons for allocating the dependency exemption, and its reasons should clearly demonstrate that it is more equitable to allocate the exemption to the noncustodial parent than it would be to allow the custodial parent to claim the exemption.

Therefore, we remand this case to the Circuit Court of Pocahontas County so that, guided by the principles set forth herein, it may conduct a hearing on this matter, setting forth reasons for its determination that the dependency exemption should be allocated.

Remanded.