T.C. Summary Opinion 2004-92
UNITED STATES TAX COURT
BILLIE BOOKER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2813-01S. Filed July 19, 2004.
Billie Booker, pro se.
Ronald T. Jordan, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time that the petition was filed. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code in effect for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
The decision to be entered is not reviewable by any other court,
and this opinion should not be cited as authority.
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Respondent determined a deficiency in petitioner's Federal
income tax of $4,086 for 1997.
The issues for decision are: (1) Whether petitioner is
entitled to dependency exemption deductions; (2) whether
petitioner is entitled to earned income credits; and (3) whether
petitioner is entitled to head of household filing status.
Background
Some of the facts have been stipulated and are so found.
The stipulations of fact and exhibits received into evidence are
incorporated herein by reference. At the time the petition in
this case was filed, petitioner resided in Fort Wayne, Indiana.
Petitioner's cousin, Ms. Angie D. Booker (Ms. Booker), is
the mother of Contrille Booker (Contrille). Petitioner's twin
sister, Ms. Beverly Booker-Smith (Ms. Booker-Smith), is the
mother of Brandon Booker (Brandon).
Petitioner timely filed her electronic 1997 Federal income
tax return as head of household and reported income of $15,019.
Petitioner claimed dependency exemption deductions for Contrille
and Brandon as well as earned income credits relating to the
children. The return states that the children are petitioner's
sons.
Petitioner provided written statements from Ms. Booker and
Ms. Booker-Smith stating that they each had given petitioner
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permission to care for their children and to claim those children
as dependents.
Respondent issued a notice of deficiency determining that
petitioner is not entitled to claim head of household filing
status, dependency exemption deductions, or earned income credits
for 1997 because she failed to substantiate her claims.
Discussion
Deductions are a matter of legislative grace, and taxpayers
must maintain adequate records to substantiate the amount of any
deductions or credits claimed. Sec. 6001; INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), Income
Tax Regs. Taxpayers generally bear the burden of proving that
the Commissioner’s determinations are incorrect. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). Section 7491 does
not apply because petitioner has failed to substantiate her
deductions and provide credible evidence.
1. Dependency Exemption Deductions
Section 151(c) allows a taxpayer to deduct an exemption
amount for each "dependent" as defined in section 152. As
relevant here, section 152(a) defines a dependent to include a
son or daughter of a sibling of the taxpayer or an individual,
other than a spouse, whose principal place of abode is the home
of the taxpayer and who is a member of the taxpayer's household
"over half of whose support, for the calendar year in which the
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taxable year of the taxpayer begins, was received from the
taxpayer (or is treated under subsection (c) or (e) as received
from the taxpayer)".
To qualify for a dependency exemption deduction, a taxpayer
must establish the total support cost expended on behalf of a
claimed dependent from all sources for the year and demonstrate
that she provided over half of this amount. See Archer v.
Commissioner, 73 T.C. 963, 967 (1980); Blanco v. Commissioner, 56
T.C. 512, 514-515 (1971); sec. 1.152-1(a)(2)(i), Income Tax Regs.
The term "support" includes food, shelter, clothing, medical
and dental care, education, and the like. Sec. 1.152-1(a)(2)(i),
Income Tax Regs. The total amount of support for each claimed
dependent furnished by all sources during the year in issue must
be established by competent evidence. Blanco v. Commissioner,
supra at 514; sec. 1.152-1(a)(1), Income Tax Regs. The amount of
support that the claimed dependent received from the taxpayer is
compared to the total amount of support the claimed dependent
received from all sources. Sec. 1.152-1(a)(2)(i), Income Tax
Regs.
Petitioner testified that Contrille and Brandon lived with
her for the entire year and that she took care of the household
and paid all the bills. Petitioner did not provide any evidence
at all regarding any amounts she may have expended to care for
Contrille or Brandon.
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The Court sustains respondent's determination that
petitioner is not entitled to dependency exemption deductions for
Contrille and Brandon in 1997.
2. Head of Household Filing Status
Section 1(b) imposes a special tax rate on individuals
filing as head of household. As relevant herein, section 2(b)
defines a "head of household" as an unmarried individual who
maintains as her home a household that for more than one-half of
the taxable year constitutes 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 that dependent
under section 151.
Respondent determined that petitioner is not entitled to
section 151 dependency exemption deductions for Contrille and
Brandon in 1997. The Court has sustained respondent's
determination regarding the section 151 deductions. That holding
is dispositive of this issue, and, as a result, the Court
sustains respondent's determination that petitioner is not
entitled to claim head of household filing status for 1997.
3. Earned Income Credit
Section 32(a)(1) allows an eligible individual an earned
income credit against the individual's income tax liability. An
eligible individual is any individual who either: (1) Has a
"qualifying child" as defined by section 32(c)(3)(A), or (2) has
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no qualifying child and meets the requirements of section
32(c)(1)(A)(ii). Merriweather v. Commissioner, T.C. Memo. 2002-
226; Briggsdaniels v. Commissioner, T.C. Memo. 2001-321.
A qualifying child is one who satisfies a relationship test,
a residency test, an age test, and an identification requirement.
See sec. 32(c)(3). Under the relationship test, the qualifying
child must be a son or daughter, a stepson or stepdaughter, or a
foster child of the taxpayer. See sec. 32(c)(3)(A). For the
taxable year in issue, Contrille and Brandon were not the
children or stepchildren of petitioner, and thus, would need to
be "eligible foster children" to be petitioner's qualifying
children. The term "eligible foster child" means an individual
who the taxpayer cares for as her 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).
Neither the Code nor the regulations define how a taxpayer
cares for an individual as his or her own child. This Court has
indicated that merely contributing financially to the support of
an individual does not rise to the level of caring for the
individual as one's own child. See Mares v. Commissioner, T.C.
Memo. 2001-216; Smith v. Commissioner, T.C. Memo. 1997-544.
There is not sufficient evidence in the record indicating that
petitioner cared for Contrille and Brandon as her own children.
There were other members of petitioner's household, including
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Brandon's own mother, Mrs. Booker-Smith, and petitioner's mother,
who were available to care for him. See Perez v. Commissioner,
T.C. Memo. 1998-442.
Petitioner has also failed to offer evidence sufficient to
show that her residence was the principal place of abode for the
children. She did not have legal custody of the children, nor
did she offer any documentation corroborating that they lived in
her household during any part of the year in issue. Accordingly,
the Court finds that the children were not the foster children of
petitioner. Because petitioner has failed to meet the
relationship test under section 32, it is not necessary to
analyze the remaining factors of section 32.
A taxpayer with no qualifying children may be eligible for
the earned income credit subject to, among other things, the
phaseout limitations of section 32(a)(2). Merriweather v.
Commissioner, supra; Briggsdaniels v. Commissioner, supra. For
1997, the earned income credit is completely phased out under
section 32(a) for a taxpayer with no qualifying children if the
taxpayer's earned income and adjusted gross income is over
$9,770. See sec. 32(a) and (b); see also Rev. Proc. 96-59,
1996-2 C.B. 392, 394-395. Petitioner's earned income and
adjusted gross income for 1997 was $15,019. Therefore,
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petitioner is not entitled to claim an earned income credit for
1997.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.