T.C. Summary Opinion 2002-25
UNITED STATES TAX COURT
TERENCE M. TAYLOR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1340-00S. Filed March 28, 2002.
Terence M. Taylor, pro se.
Raymond M. Boulanger, for respondent.
DINAN, 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
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effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Respondent determined a deficiency in petitioner’s Federal
income tax of $5,757 for the taxable year 1997.
The issues for decision are: (1) Whether petitioner is
entitled to head of household filing status; (2) whether
petitioner is entitled to three dependency exemption deductions;
and (3) whether petitioner is entitled to an earned income
credit. Petitioner does not dispute respondent’s determination
that he is liable for self-employment income tax and entitled to
a deduction therefor.
Petitioner resided in Buffalo, New York, on the date the
petition was filed in this case.
Petitioner has three children who have resided with him from
birth: Tamaris L. Taylor, now deceased, Lakeda S. Taylor, and
Twila N. Taylor. At the end of the year in issue, these children
were 20, 17, and 6 years old, respectively. Petitioner worked 20
hours per week, Tamaris was not employed, and Lakeda and Twila
were in school. The children’s mother resided in a portion of
the same house as petitioner and the children and was employed as
a dietician. Petitioner and the children’s mother have never
been married, and custody of the children has never been legally
established.
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Petitioner filed a Federal income tax return for taxable
year 1997 as a head of household. He claimed three dependency
exemption deductions, one for each of his children, and he
claimed an earned income credit with two qualifying children--
Lakeda and Twila. He reported the following income tax
liability:
Wage income $11,126
Standard deduction 6,050
Personal exemption deduction 2,650
Dependency exemption deductions 7,950
Taxable income -0-
Total tax -0-
Earned income credit 3,656
In the statutory notice of deficiency, respondent changed
petitioner’s filing status to single, disallowed the three
dependency exemption deductions, and disallowed the full amount
of the claimed earned income credit, because petitioner had not
provided supporting information.
At trial, respondent’s sole argument was that petitioner is
not entitled to head of household filing status, the dependency
exemption deductions, and the earned income credit, because he
has not provided documentary evidence proving he has legal
custody of the children.
Among other requirements, a taxpayer generally is entitled
to a dependency exemption deduction for a child if the taxpayer
provides over half of the child’s support during the taxable
year. Secs. 151(a), (c), and 152(a). The child’s gross income
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must not exceed the exemption amount, or the child must be either
under the age of 19 or a student under the age of 24. Sec.
151(c)(1).
Generally, an unmarried taxpayer is entitled to head of
household filing status if the taxpayer maintains a household
which is the principal place of abode of at least one unmarried
child. Sec. 2(b)(1).
Under section 32, an eligible individual is allowed a credit
which is calculated as a percentage of the individual’s earned
income, subject to certain limitations. Sec. 32(a)(1). Any
individual with a qualifying child is an eligible individual.
Sec. 32(c)(1). As is relevant here, the definition of a
qualifying child for purposes of section 32 includes a child of a
taxpayer who has the same principal place of abode as the
taxpayer for more than half of the taxable year. Sec.
32(c)(3)(A). A qualifying child must be either under the age of
19 (or a student under the age of 24) at the close of the taxable
year, or be permanently and totally disabled at any time during
the year. Sec. 32(c)(3)(C).
We found petitioner to be a credible witness and accept his
testimony concerning his relationship with his children and their
residence during the year in issue. On these facts, we find it
unnecessary for petitioner to produce legal documentation proving
he had custody of his children during that year, as respondent
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argues is necessary. Petitioner has established to our
satisfaction that he meets the requirements for each of the
relevant Code provisions. With respect to the dependency
exemption deductions, filing status, and earned income credit,
there is scant evidence in the record concerning the financial
support of the children, the cost of maintaining their household,
or the income of the children’s mother. However, because
respondent was clear at trial that his sole disagreement with
petitioner was over legal custody of the children, we find that
respondent has conceded these issues. We accordingly hold that
petitioner is entitled to head of household filing status, the
dependency exemption deductions, and the earned income credit as
claimed.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
under Rule 155.