T.C. Summary Opinion 2005-54
UNITED STATES TAX COURT
NOEL COLSTOCK, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22258-03S. Filed April 25, 2005.
Noel Colstock, pro se.
Miriam C. Dillard, 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,
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and this opinion should not be cited as authority.
Respondent determined for 2002 a deficiency in petitioner’s
Federal income tax of $3,494.
The issues for decision are whether petitioner is entitled
to: (1) A dependency exemption deduction, (2) the earned income
credit, (3) head of household filing status, and (4) the child
tax credit.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. At the time the petition
was filed, petitioner resided in Miami, Florida.
Although he was married, petitioner filed as head of
household and reported income of $14,605 on his 2002 Federal
income tax return. Petitioner has a child with Ms. Linda White
Johnson (Ms. Johnson), who is not his wife. He claimed a
dependency exemption deduction for this daughter, LJ.1 He also
claimed a child tax credit of $171, an earned income credit of
$2,329, and an additional child tax credit of $426.
Respondent issued a notice of deficiency determining that
petitioner is not entitled to head of household filing status,
the claimed dependency exemption deduction, or any of the credits
applicable to the child for 2002 because he failed to
1
The Court only uses the minor child’s initials.
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substantiate his claims.
Discussion
Deductions are a matter of legislative grace, and taxpayers
must maintain adequate records to substantiate the amounts 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 (1933). Section 7491 does not
apply because petitioner has failed to substantiate his
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 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)”.
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 he provided over half of this amount. See Archer v.
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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 claims that LJ lived with him for the entire
year. Petitioner also claims that he provided for LJ by giving
money to her mother, Ms. Johnson. Petitioner has provided no
evidence at all regarding any amounts he may have expended to
care for LJ.
The Court sustains respondent’s determination that
petitioner is not entitled to a dependency exemption deduction
for LJ for 2002.
2. Earned Income Credit
Section 32(a)(1) allows an eligible individual an earned
income credit against the individual’s income tax liability. The
credit is calculated as a percentage of the individual’s earned
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income. Sec. 32(a)(1). Section 32(a)(2) and (b) limit the
credit allowed based on whether the eligible individual has no
qualifying children, one qualifying child, or two or more
qualifying children.
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”. A qualifying child includes a son
or daughter of the taxpayer who has the “same principal place of
abode as the taxpayer for more than one-half of such taxable
year”. Sec. 32(c)(3)(A)(ii) and (B)(i)(I).
Ms. Johnson testified that LJ lived with her during 2002 and
that they did not live with petitioner. Petitioner has failed to
prove that LJ lived with him; therefore, the Court finds that LJ
is not a qualifying child under section 32(c)(3)(A)(ii).
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, T.C. Memo. 2002-226; Briggsdaniels v. Commissioner,
T.C. Memo. 2001-321. For 2002, 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 more than $5,280 (or $6,280 for married
individuals filing jointly). See sec. 32(a) and (b).
Petitioner's earned income for 2002 was $14,605.
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Finally, section 32 requires that a married individual must
file a joint return with the individual's spouse for the year for
which the credit is claimed. Sec. 32(d); sec. 1.32-2(b)(2),
Income Tax Regs. For purposes of section 32(a), a taxpayer's
marital status is determined under section 7703. Section 7703(b)
provides, in pertinent part, that a married person whose spouse
did not live with him for the last 6 months of the taxable year
is not considered as married. Sec. 7703(b)(3).
Petitioner testified that during 2002, he was married to a
woman other than Ms. Johnson, but that his wife was not living
with him. He failed, however, to present any other evidence
other than his oral testimony that his wife did not live with him
during the last 6 months of the year. The Court, therefore,
concludes that petitioner was married during 2002. Since
petitioner and his wife did not file a joint return, and
petitioner’s earned income exceeds the phaseout amount, the Court
concludes that he is not entitled to claim an earned income
credit for 2002.
3. 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 an
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unmarried daughter. Sec. 2(b)(1)(A)(i).
As a married individual, petitioner is not entitled to claim
head of household filing status for 2002. Respondent’s
determination is sustained.
4. Child Tax Credit
For the taxable year 2002, taxpayers are allowed to claim a
tax credit of $600 for each qualifying child. Sec. 24(a). The
plain language of section 24 establishes a three-pronged test to
determine whether a taxpayer has a qualifying child. If one of
the qualifications is not met, the claimed child tax credit must
be disallowed. The first element of the three-pronged test
requires that a taxpayer must have been allowed a deduction for
that child under section 151. Sec. 24(c)(1)(A).
As stated supra p. 4, the Court has sustained respondent’s
determination that petitioner is not entitled to a dependency
exemption deduction for LJ. Thus, petitioner fails the first
prong of the test of section 24. The Court sustains
respondent’s determination regarding the section 24 child tax
credits.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.