T.C. Summary Opinion 2004-111
UNITED STATES TAX COURT
RALPH W. VARNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19249-02S. Filed August 24, 2004.
Ralph W. Varner, pro se.
Carina J. Campobasso, 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 $4,355 for 2001. The issues for decision are:
(1) Whether petitioner is entitled to dependency exemption
deductions, (2) whether petitioner is entitled to head of
household filing status, and, (3) whether petitioner is entitled
to an earned income credit.
Background
Some of the facts have been orally stipulated and are so
found. The stipulations of fact are incorporated herein by
reference. Petitioner resided in Manchester, New Hampshire, at
the time the petition was filed.
Petitioner and Patricia Johnson (Ms. Johnson) have two
children, Nicholas and Nicole Johnson (the children). Petitioner
and Ms. Johnson were never married. Each week petitioner had $25
withheld from his paycheck and sent to Ms. Johnson for support of
the children. He also provided Ms. Johnson with an additional
$1,350 "just to help her out."
Petitioner and Ms. Johnson lived apart at all times during
2001. The children live with Ms. Johnson and her partner.
Petitioner's children stayed with him every weekend and
during those visits he provided food and shelter. Petitioner
also purchased clothing and provided medical and dental insurance
for the children. However, petitioner did not provide respondent
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with any receipts that evidenced the amount of clothing or
insurance expenses he incurred.
Discussion
The Commissioner's deficiency determinations in the notice
of deficiency are presumed correct, and generally taxpayers bear
the burden of proving that the Commissioner's determinations are
incorrect. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
(1933). In some cases, however, the burden may shift to the
Commissioner under section 7491(a). Section 7491 does not apply
here because petitioner has failed to comply with the
requirements of section 7491(a).
1. Dependency Exemption Deductions
In general, section 151(c) allows a taxpayer to deduct an
exemption amount for each "dependent" as defined in section 152.
A dependent is defined as a son or daughter 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 (or
is treated under subsection (c) or (e) as received from the
taxpayer)." Sec. 152(a).
The Court has previously held that section 152(e), Support
Test in Case of Child of Divorced Parents, applies to cases
where the child's parents have never been married. King v.
Commissioner, 121 T.C. 245, 251 (2003). In the case of a child
of parents who live apart at all times during the last 6 months
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of the calendar year, section 152(e)(1) provides as a general
rule that the child shall be treated as receiving over half of
his or her support during the calendar year from the parent
having custody for the greater portion of the calendar year (the
custodial parent). Although there are exceptions to this general
rule, none of the exceptions apply to the present case. See sec.
152(e)(2), (3), and (4).
As relevant herein, section 1.152-4(b), Income Tax Regs.,
provides that when there is no decree or agreement establishing
who has custody, the parent who has "physical custody of the
child for the greater portion of the calendar year" will be
deemed to be the custodial parent.
There is no evidence in the record that there was a custody
agreement between petitioner and Ms. Johnson. In the absence of
a custody agreement, the Court must look to the division of
physical custody. Id. Petitioner testified that his children
spent the weekends with him and the weekdays with their mother.
Because Ms. Johnson had physical custody of the children for a
greater portion of the calendar year, she is deemed to be the
custodial parent, not petitioner. Therefore, petitioner is not
entitled to the dependency exemption deduction for either of the
children. In light of the foregoing, the Court sustains
respondent's determination on this issue.
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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 his home a household that for more than one-half of
the taxable year constitutes the principal place of abode of a
person who is an unmarried son or daughter. See sec.
2(b)(1)(A)(i).
The Court has determined that Ms. Johnson had physical
custody of the children for a greater portion of the calendar
year. 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 2001.
3. Earned Income Credit
Section 32(a) provides for an earned income credit in the
case of an eligible individual. As relevant to this case, an
"eligible individual" is defined as an individual who has a
"qualifying child" for the taxable year. Sec. 32(c)(1)(A)(i).
To be a qualifying child, an individual must, inter alia,
have the same principal place of abode as the taxpayer for more
than half of the taxable year. Sec. 32(c)(3)(A)(ii). However,
as previously discussed, petitioner's children spent less than
half of 2001 with him. Consequently, it cannot be said that
petitioner's residence was the children's principal place of
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abode for more than half of the year.
An individual, however, may be eligible for an earned income
credit even if the individual does not have a qualifying child
for the taxable year. Sec. 32(c)(1)(A)(ii). Such an individual
generally would be eligible only if the individual's modified
adjusted gross income were less than $10,710. See Rev. Proc.
2001-13, sec. 3.03(1), 2001-1 C.B. 337, 339. The parties did not
provide a copy of petitioner's tax return for 2001 that would
allow the Court to determine his adjusted gross income for the
year and petitioner's eligibility for an earned income credit
without a qualifying child. If petitioner's income is less than
the earned income limit amount, the credit should be reflected in
a computation of the decision.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be
entered under Rule 155.