T.C. Summary Opinion 2004-61
UNITED STATES TAX COURT
HUMBERTO M. BETANCOURT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1154-03S. Filed May 13, 2004.
Humberto M. Betancourt, pro se.
Ric D. Hulshoff, for respondent.
PANUTHOS, Chief 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.
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Respondent determined a deficiency in Federal income tax of
$4,305.35 for the 2001 taxable year. The issues for decision
are: (1) Whether petitioner is entitled to head-of-household
filing status for 2001; (2) whether petitioner is entitled to
dependency exemption deductions for Erica Benicna Maceda and Ivan
Maceda Rodriguez for 2001; (3) whether petitioner is entitled to
an additional child tax credit of $22 for 2001; and (4) whether
petitioner is entitled to an earned income credit of $4,008 for
2001.
Background
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference. At the
time of filing his petition, petitioner resided in Los Angeles,
California.
During the year in issue, petitioner was a hardwood flooring
installer, and Cristina Rodriguez (Ms. Rodriguez) was a cook.
Ms. Rodriguez received wages of approximately $15,000 in 2001.
Petitioner and Ms. Rodriguez have three children: (1) Erica
Benicna Maceda (Erica), born February 13, 1988; (2) Tanya, born
1989; and (3) Ivan Maceda Rodriguez (Ivan), born April 15, 1993.
Petitioner and Ms. Rodriguez were not married in 2001, but
they shared a checking account during the year. Also in 2001,
they owned a duplex with two addresses: 4219 Zamora Street and
4221 Zamora Street. The duplex consisted of side-by-side
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apartments with separate entrances. The apartment at 4219 Zamora
Street has one bedroom, and the apartment at 4221 Zamora Street
has two. Erica, Tanya, and Ivan had keys to both apartments and
ate meals sometimes in one or the other apartment.
Petitioner filed a timely Federal income tax return for the
2001 taxable year. The return reflected an address of “4221
Zamora Street” and reported total income of $11,000. Petitioner
filed as a “head of household” and claimed dependency exemption
deductions for Erica and Ivan, but not Tanya. Petitioner also
claimed an additional child tax credit of $22 and an earned
income credit of $4,008 with Erica and Ivan as qualifying
children.
Respondent issued petitioner a notice of deficiency dated
November 15, 2002.1
Discussion
Section 7491(a) provides that in a court proceeding, the
burden of proof with respect to any factual issue shifts to the
1
The notice of deficiency included a rate adjustment
credit of $138.65, which petitioner had not claimed in his 2001
tax return. The Economic Growth and Tax Relief Reconciliation
Act of 2001, Pub. L. 107-16, sec. 101(a), 115 Stat. 38, 41-42,
created a new regular income tax bracket of 10 percent for
taxable years beginning after Dec. 31, 2000. See sec. 1(i).
Congress decided to implement the 10-percent rate bracket for
2001 via a rate reduction credit for that taxable year. See
secs. 1(i)(1)(D), 6428; H. Conf. Rept. 107-84, at 5-6 (2001).
The maximum amount of the rate reduction credit depends upon a
taxpayer’s filing status for 2001, and thus it is computational.
See sec. 1(i)(1)(B).
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Commissioner under certain prescribed conditions. We conclude
that the burden of proof remains with petitioner, since he has
not met the criteria of section 7491(a)(2)(A) and (B). Indeed,
we found petitioner’s testimony was at times inconsistent with
both Ms. Rodriguez’s testimony and documents made part of this
record.
1. Head-of-Household Filing Status
Petitioner filed as “head of household” for 2001. In
general, section 2(b)(1)(A)(i) provides that a taxpayer shall be
considered a head of a household if, and only if, such taxpayer
is not married at the close of his or her taxable year, is not a
surviving spouse, and maintains as his or her home a household
which constitutes for more than one-half of such taxable year the
principal place of abode, as a member of such household, of a son
or daughter of the taxpayer. A taxpayer shall be considered as
maintaining a household only if over half of the cost of
maintaining the household during the taxable year is furnished by
such taxpayer. Sec. 2(b)(1).
During the year in issue, petitioner was not married to Ms.
Rodriguez and was not a surviving spouse. With respect to
maintaining a household, petitioner contends that 4221 Zamora
Street was a household that constituted the principal place of
abode for Erica, Ivan, and petitioner during 2001. Petitioner
further contends that the other address of the duplex–-4219
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Zamora Street–-was a household solely for Ms. Rodriguez and Tanya
during the taxable year. The record, however, does not support
petitioner’s contentions.
The extent of a “household” is not determined solely by
physical boundaries; instead we must look to all of the facts in
any particular case. Estate of Fleming v. Commissioner, T.C.
Memo. 1974-137. Tanya had unrestricted access to petitioner’s
household and had meals with Erica and Ivan during 2001.
Moreover, Ms. Rodriguez testified that she and the children lived
at the same address that petitioner claimed as his household. On
the basis of the record, we find that petitioner’s household
consisted of Ms. Rodriguez, the children, and petitioner, whether
it be at 4221 Zamora Street or the entire duplex.
Consequently, petitioner did not maintain such household
under section 2(b)(1), because he did not establish that he
furnished over half the cost of maintaining it for 2001.
Petitioner reported total income of $11,000, whereas Ms.
Rodriguez had wages of approximately $15,000. Accordingly, we
conclude that petitioner is not entitled to head-of-household
filing status, and we sustain respondent’s determination on this
issue.
2. Dependency Exemption Deductions
A taxpayer may be entitled to a deduction of the exemption
amount for each dependent. Sec. 151(a), (c). The term
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“dependent” includes a son of the taxpayer “over half of whose
support, for the calendar year in which the taxable year of the
taxpayer begins, was received from the taxpayer”. Sec. 152(a).
Given the limited information as to the amount paid for
support of the children, the existence of the joint checking
account and Ms. Rodriguez’s higher income for 2001 lead us to the
conclusion that petitioner did not provide over half of the
support for Erica and Ivan. Accordingly, petitioner is not
entitled to dependency exemption deductions for Erica and Ivan
for 2001, and we sustain respondent on this issue.
3. Additional Child Tax Credit
Section 24(a)(1) provides for a “credit against the tax * *
* for the taxable year with respect to each qualifying child of
the taxpayer”. The term “qualifying child” means any individual
if three tests are satisfied. Sec. 24(c)(1).
In the present case, the only relevant test is whether the
taxpayer is allowed a deduction under section 151 with respect to
such individual for the taxable year. Sec. 24(c)(1)(A). We have
concluded, however, that petitioner is not entitled to dependency
exemption deductions for Erica and Ivan for 2001. Accordingly,
they are not qualifying children, and petitioner is not entitled
to the additional child tax credit of $22 for 2001. We sustain
respondent’s determination on this issue.
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4. Earned Income Credit
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 any
individual who has a qualifying child for the taxable year.2 A
qualifying child is one who satisfies a relationship test, a
residency test, and an age test. Sec. 32(c)(3). Erica and Ivan
satisfy all three tests, and they are qualifying children with
respect to petitioner.
However, they are also qualifying children with respect to
Ms. Rodriguez. Under such circumstances, for taxable years
beginning on or before December 31, 2001, section 32(c)(1)(C)
provides:
(C) 2 or more eligible individuals.–-If 2 or more
individuals would * * * be treated as eligible
individuals with respect to the same qualifying child
for taxable years beginning the same calendar year,
only the individual with the highest modified adjusted
gross income for such taxable years shall be treated as
an eligible individual with respect to such qualifying
child.
Section 32(c)(5) defines the term “modified adjusted gross
2
Petitioner could also be an eligible individual, even if
we were to find that he did not have any qualifying children.
See sec. 32(c)(1)(A)(ii). In such a situation, however,
petitioner would still not be entitled to the earned income
credit for 2001 because his total income of $11,000 exceeded the
“completed phaseout amount” of $10,710. See Rev. Proc. 2001-13,
sec. 3.03(1), 2001-1 C.B. 337, 339.
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income” to be the taxpayer’s adjusted gross income with certain
amounts disregarded and certain amounts included.
In the present case, we conclude that petitioner’s modified
adjusted gross income would not be higher than that of Ms.
Rodriguez, given that her wage income alone was greater than
petitioner’s total income for 2001. Accordingly, we sustain
respondent’s determination on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
for respondent.