T.C. Memo. 2003-254
UNITED STATES TAX COURT
NIMFA C. MOLINA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8989-02. Filed August 25, 2003.
Nimfa C. Molina, pro se.
Angelique M. Neal, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
LARO, Judge: Petitioner petitioned the Court to redetermine
respondent’s determination of a $20,177 deficiency in her 1997
Federal income tax. We decide the following issues as to 1997:
1. Whether petitioner may deduct three dependency
exemptions in addition to one for herself. We hold she may.
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2. Whether petitioner may file as “Head of Household”. We
hold she may.
3. Whether petitioner may deduct certain disputed itemized
amounts. We hold she may to the extent stated herein.
FINDINGS OF FACT
Some facts were stipulated. The stipulated facts and the
accompanying exhibits are incorporated herein by this reference.
We find the stipulated facts accordingly. Petitioner resided in
Downey, California, when her petition was filed. During 1997,
she received wages of $84,515 working as a nurse.
During 1997, petitioner lived in a house (house). She and
her former boyfriend, Danilo P. Lodevico (Lodevico), had bought
the house before 1994 and had titled it in both of their names.
Petitioner always made all of the mortgage and tax payments on
the house, and Lodevico never gave any money to her for household
or support expenses. In 1994, Lodevico moved out of the house
and conveyed his interest in the house to petitioner by quitclaim
deed. Petitioner did not record that deed because she believed
that it was too expensive to do so.
Petitioner filed with respondent a 1997 Federal income tax
return using the filing status of “Head of Household”. That
return was prepared by a paid preparer. Petitioner reported on
the return that her dependents were Abigail Lodevico (Abigail),
Escolastica Cauilan (Escolastica), and Erica Molina (Erica).
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Abigail, the daughter of petitioner and Lodevico, was born on
June 14, 1982, and lived with petitioner during all of 1997.
Abigail depended on petitioner during 1997 for the payment of all
of her expenses. Escolastica, who died in 1998, was petitioner’s
elderly grandmother. Escolastica lived with petitioner during
all of 1997 and depended on petitioner for the payment of all of
her expenses. Erica was petitioner’s young niece. Erica’s
parents (petitioner’s brother and his wife) resided in New
Jersey, and petitioner took care of Erica during all of 1997.
During 1997, Erica depended on petitioner for the payment of
substantially all of her expenses. Erica’s parents during that
year were experiencing problems with another child of theirs who
is autistic. Erica was reunited with her parents in 1998 after
having lived with petitioner for approximately 18 months.
Petitioner also reported on her 1997 return that she was
entitled to deduct certain itemized amounts. These deductions
were for medical expenses of $10,243, State and local income
taxes of $3,798, real estate taxes of $4,900, personal property
taxes of $1,356, mortgage interest of $37,919, charitable
contributions of $11,490, unreimbursed employee business expenses
of $15,589, and tax return preparation fees of $150. Petitioner
reported that the specific unreimbursed business expenses were
union and professional dues of $885, professional subscriptions
of $450, uniforms and protective clothing of $3,782,
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“CE/BOOKS/TUITION/EQUIPMENT/BEEPER/CELLULAR” of $3,452, and
“TRAVEL/LODGING” of $7,020.
In the notice of deficiency, respondent disallowed
petitioner’s deductions of each of the claimed itemized amounts,
disallowed her claimed dependency exemptions for Abigail,
Escolastica, and Erica, and changed petitioner’s filing status to
“Single”. The notice of deficiency states as to these
disallowances and change:
We have disallowed the amount(s) shown on your return
because you did not contact us or keep your scheduled
appointment. If you will contact our office, we will
arrange a time convenient for you to come in so we can
reconsider the proposed adjustment.
Respondent conceded at trial that petitioner may deduct State and
local income taxes of $3,798.
During 1997, petitioner paid medical expenses of $10,000.
This amount included dental services to repair the bridge of
petitioner’s mouth and to remove one or more of Abigail’s wisdom
teeth. This amount also included medical services connected with
a stroke suffered by Escolastica.
During 1997, petitioner paid $150 to her tax return preparer
for tax preparation services. During 1998, Associated Home
Equity Services, Inc., issued to petitioner a 1997 Form 1098,
Mortgage Interest Statement, reporting that she alone had paid
$20,919 of mortgage interest to it during 1997.
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OPINION
1. Burden of Proof
Taxpayers generally must prove the Commissioner’s
determinations wrong in order to prevail. Rule 142(a)(1);1 Welch
v. Helvering, 290 U.S. 111, 115 (1933). As one exception to this
rule, section 7491(a) places upon the Commissioner the burden of
proof with respect to any factual issue if the taxpayer
maintained adequate records, satisfied applicable substantiation
requirements, cooperated with the Commissioner, and introduced
during the court proceeding credible evidence on the factual
issue. The legislative history of section 7491(a) clarifies that
taxpayers must prove that they have satisfied the adequate
records, substantiation, and cooperation requirements before that
section places the burden of proof upon the Commissioner. H.
Conf. Rept. 105-599, at 239 (1998), 1998-3 C.B. 747, 994 (“The
taxpayer has the burden of proving that it meets each of these
conditions, because they are necessary prerequisites to
establishing that the burden of proof is on the Secretary.”); see
also Prince v. Commissioner, T.C. Memo. 2003-247.
We do not find that petitioner maintained adequate records,
satisfied applicable substantiation requirements, or cooperated
1
Rule references are to the Tax Court Rules of Practice and
Procedure. Section references are to the applicable versions of
the Internal Revenue Code.
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with respondent. Accordingly, we hold that section 7491(a) does
not apply here to place the burden of proof upon respondent.
2. Dependency Exemptions/Filing Status
Section 152(a) allows a taxpayer to treat certain
individuals (e.g., daughter, grandmother, niece) as dependents if
the taxpayer provided during the taxable year over half of their
support. See also sec. 151(a), (c) (taxpayer may deduct an
exemption amount for each dependent). Support generally includes
amounts used for a dependent’s food, shelter, clothing, medical
and dental care, education, and the like. Sec. 1.152-1(a)(2)(i),
Income Tax Regs.
Respondent argues that petitioner is not entitled to deduct
dependency exemptions for Abigail, Escolastica, and Erica
because, respondent asserts, petitioner has not presented
credible evidence that these individuals lived with her or that
she provided more than half of their support. We disagree with
this argument and these assertions. Petitioner testified
credibly and without contradiction as to both of these points,
and respondent did not challenge this testimony either on cross-
examination or through the presentation of other evidence. In
fact, as to the claimed dependents, the full extent of
respondent’s cross-examination was as follows:
Q Ms. Molina, what was your niece’s name?
A Erica Molina.
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Q Erica?
A Uh-huh.
Q And she lived with you here in California?
A Yes.
Q And your sister-in-law and your brother, where
do they live?
A They live in New Jersey.
Q New Jersey. * * *
Respondent argues on brief that the Court generally does not
rely upon an individual taxpayer’s testimony to meet his or her
burden of proof. However, petitioner’s testimony is credible,
uncontroverted, and not improbable. See Diaz v. Commissioner,
58 T.C. 560 (1972) (taxpayer’s testimony sufficient to meet
burden of proof); Am. Underwriters, Inc. v. Commissioner, T.C.
Memo. 1996-548 (same). Contrary to respondent’s argument, the
Court will not disregard petitioner’s uncontroverted testimony
simply because she is an interested witness.
We also conclude from the record that petitioner may file as
head of household. Under section 2(b)(1)(A)(i), an individual
such as petitioner will qualify for head of household filing
status if she maintains as her home a household that is the
principal place of abode of certain family members (e.g., a
daughter) for more than one-half of the taxable year. The record
establishes that petitioner resided with all three of her
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dependents during all of 1997 and that she furnished all of the
household’s support during that year.
3. Itemized Amounts
Petitioner has met her burden only as to some of the claimed
itemized amounts. The record establishes that petitioner is
entitled to deduct, in addition to the $3,798 of State and local
income taxes conceded by respondent, $20,919 of mortgage
interest, $10,000 of medical expenses, $150 for tax preparation,
and $4,900 for real estate taxes. As to the latter amount, we do
not understand respondent to challenge that $4,900 of real estate
taxes was paid in 1997 as to the house, but only that petitioner
(as opposed to Lodevico) paid these taxes. We find as a fact
that Lodevico did not pay those taxes and that petitioner did.
All arguments made by the parties and not discussed herein
have been rejected as meritless.
Decision will be
entered under Rule 155.