T.C. Summary Opinion 2001-117
UNITED STATES TAX COURT
ELISEO ARGOMANIZ, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18754-99S. Filed July 31, 2001.
Eliseo Argomaniz, pro se.
Ric D. Hulshoff, for respondent.
PAJAK, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the year in issue.
- 2 -
Respondent determined a deficiency of $4,006 in petitioner's
1998 Federal income tax. This Court must decide: (1) Whether
petitioner is entitled to dependency exemption deductions for his
niece and nephew; (2) whether petitioner is entitled to file as
head of household instead of single; and (3) whether petitioner
is entitled to the child care credit, the child tax credit, and
the earned income credit.
Petitioner resided in Santa Ana, California, at the time he
filed his petition.
During 1998, petitioner resided for part of the year at 2321
South Maple Street (South Maple) and for the other part of the
year at 2018 Orange Avenue. Petitioner's two sisters and their
12 children lived with petitioner and his brother at the South
Maple address from May 1, 1996, to October 30, 1998. Petitioner
had been renting the property with his brother when both his
sisters had problems with their husbands, which caused the
sisters and children to reside with petitioner.
There are two children who are relevant to the issues in
this case, Melissa, petitioner's niece, and Omar, petitioner's
nephew. Melissa was born in 1995 and Omar was born in 1993. One
of the sisters living with petitioner was Melissa's mother. The
other sister living with petitioner was Omar's mother.
Petitioner and his brother worked in construction during
1998. His sisters were not working at that time, but one sister
- 3 -
was receiving some type of financial assistance from the
Government. Petitioner did not know whether the fathers of the
children were paying any child support. Petitioner testified
that his brother "was actually responsible for all of us" and
that "he was the one that would make more money than everyone".
The rent for the three bedroom house was $1,300 per month.
Petitioner paid $400 of the $1,300 payments. Each week
petitioner and his brother would spend about $200 on food. Of
that amount petitioner would pay at least $50 a week. Petitioner
would buy the children clothes when he would get spare money.
Petitioner did not know how much it cost in total to support
Melissa and Omar in 1998.
On his 1998 tax return, petitioner claimed Melissa and Omar
as dependents and listed them as foster children. Petitioner
also filed as head of household and claimed his niece and nephew
for the child care credit, the child tax credit, and the earned
income credit.
Respondent determined that petitioner was not entitled to
claim his niece and nephew as dependents, that his filing status
was single rather than head-of-household, and that he was not
entitled to the child care, child tax, and earned income credits.
Section 151 allows a taxpayer to deduct an annual exemption
amount for each dependent, as defined in section 152. Section
152(a) provides, in pertinent part, that a dependent includes an
- 4 -
individual over half of whose support in the taxable year was
received from the taxpayer and whose principal place of abode for
the taxable year is the home of the taxpayer and is a member of
the taxpayer's household. Sec. 152(a)(9). In determining
whether or not an individual received over half of his or her
support from the taxpayer, there shall be taken into account the
amount of support received from the taxpayer as compared to the
entire amount of support which the individual received from all
sources, including support which the individual himself or
herself supplied. Sec. 1.152-1(a)(2)(i), Income Tax Regs.
Support includes food, shelter, clothing, medical and dental
care, education, and the like. Sec. 1.152-1(a)(2)(i), Income Tax
Regs.
To establish that petitioner provided more than one-half of
the claimed dependents' support, he must first show by competent
evidence the total amount of support furnished by all sources for
the year in issue. Blanco v. Commissioner, 56 T.C. 512, 514
(1971). Petitioner has not offered competent evidence of the
total amount of support provided for each of the claimed
dependents in 1998. Aside from his testimony, petitioner
presented no evidence to corroborate or substantiate any of the
claimed support expenses, such as rent, or that these expenses
were indeed paid by petitioner. In fact, based on petitioner's
testimony, it appears that most of the family's expenses were
- 5 -
paid by petitioner's brother, with help from the Government.
Without proper substantiation, the Court cannot conclude from the
record that more than one-half of the support of each claimed
dependent was provided by petitioner. Thus, petitioner has
failed to establish that he provided over half of the total
support for Melissa and Omar. Accordingly, we hold that
petitioner is not entitled to claim his niece and nephew as
dependents under section 151.
Respondent determined that petitioner's filing status should
be changed from head of household to single. Section 2(b), in
relevant part, defines head of household as an unmarried taxpayer
who maintains as his home a household which constitutes for more
than one-half of such taxable year the principal place of abode
of a person who is a dependent of the taxpayer, if the taxpayer
is entitled to a deduction for the taxable year for such person
under section 151. Sec. 2(b)(1)(A)(ii). Because we held that
petitioner is not entitled to a deduction for either his niece or
his nephew in 1998 under section 151, we also hold that
petitioner may not claim head of household filing status. We
sustain respondent's determination as to this issue.
Petitioner claimed a credit for child and dependent care
expenses of $566 for 1998, which respondent disallowed. Section
21 provides, in part, that an individual who maintains a
household which includes as a member a qualifying individual
- 6 -
shall be allowed a credit based on the expenses for household
services and dependent care services incurred to enable the
taxpayer to be gainfully employed. Sec. 21(a) and (b). Section
21(b)(1) defines, in pertinent part, a qualifying individual as a
dependent of the taxpayer who is under the age of 13 and with
respect to whom the taxpayer is entitled to a dependency
exemption deduction.
We have held that petitioner is not entitled to dependency
exemption deductions for his niece and nephew. Moreover,
petitioner did not "maintain a household" because he did not show
that he furnished over half the cost of maintaining the home.
Sec. 21(e)(1). We sustain respondent's determination with
respect to this credit.
Petitioner claimed a child tax credit of $473 for 1998,
which respondent disallowed. Section 24(a) allows a credit for
each qualifying child of the taxpayer. A "qualifying child"
means any individual if the taxpayer is allowed a deduction under
section 151 with respect to the individual for the taxable year,
the individual has not attained the age of 17 by the close of the
year, and the individual bears a relationship to the taxpayer
described in section 32(c)(3)(B). Sec. 24(c). In this case,
because petitioner is not allowed dependency exemptions under
section 151 for his niece and nephew, they are not qualifying
children. Petitioner does not qualify for the child tax credit
- 7 -
in 1998. We sustain respondent's determination as to this issue.
Petitioner claimed an earned income credit of $1,857 for
1998, which respondent disallowed. Section 32(a) provides for an
earned income credit in the case of an eligible individual.
Section 32(c)(1)(A)(i), in pertinent part, defines an "eligible
individual" as an individual who has a qualifying child for the
taxable year. A qualifying child is one who satisfies a
relationship test, a residency test, and an age test. Sec.
32(c)(3). To satisfy the relationship test in this case, the
qualifying child must be an eligible foster child of petitioner.
Sec. 32(c)(3)(B)(i)(III). An eligible foster child is an
individual for whom the taxpayer cares for as the taxpayer's own
child and who has the same principal place of abode as the
taxpayer for the taxpayer's entire taxable year. Sec.
32(c)(3)(B)(iii).
The children resided with petitioner only until October 30,
1998. They did not reside with him for the entire taxable year.
Moreover, no evidence was presented that petitioner cared for his
niece and nephew as his own children. We find that the niece and
- 8 -
nephew are not eligible foster children with regard to
petitioner. Accordingly, we sustain respondent's determination
as to the earned income credit.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.