I agree with Opus - it's legal, but it's dumb, and will cost money for no benefit. There is no child care credit to Dad (because it's paid to the child's Mom). It's clearly a sham as Mom is being paid by Dad to do what Mom is legally obligated to do - care for her children. I guess it could be reported as wages but I doubt if it would even qualify for that due to the sham. Also, it will prevent Dad from claiming Mom as a dependent.
Perhaps it has to do with EIC for Mom, but I can see the IRS denying it if they chose to audit based on the argument that it's a scheme merely for a tax benefit.
