T.C. Summary Opinion 2005-130
UNITED STATES TAX COURT
CHUE Y. HER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8683-03S. Filed August 29, 2005.
Chue Y. Her, pro se.
Thomas M. Newman, for respondent.
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7463 of the Internal Revenue Code in effect
at the time the petition was filed.1 The decision to be entered
is not reviewable by any other court, and this opinion should not
be cited as authority.
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
year in issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
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Respondent determined a deficiency of $5,183 in petitioner’s
Federal income tax for the year 2001.
The issues for decision are whether petitioner is entitled
to: (1) Head-of-household filing status under section 2(b); (2)
dependency exemption deductions for three children under section
152; (3) an earned income credit under section 32(a); (4) a child
and dependent care credit under section 21(a)(1); and (5) a child
tax credit under section 24.
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 Fresno, California.
Petitioner was employed as a medical assistant during the
year 2001. She filed her return for 2001 as a head of household.
She reported gross income of $18,331 and claimed dependency
exemptions for three children, an earned income credit of $2,904,
a child care credit of $13, and a child tax credit of $833.
Respondent issued a notice of deficiency determining that
petitioner was not entitled to head-of-household filing status,
the claimed dependency exemption deductions, the earned income
credit, the child care credit, and the child tax credit because
she failed to substantiate her entitlement to them.
Deductions are a matter of legislative grace, and taxpayers
must maintain adequate records to substantiate the amounts of any
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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 determination was incorrect. Rule 142(a);
Welch v. Helvering, 290 U.S. 111 (1933).2
Section 1(b) imposes a special tax rate on individuals whose
filing status is head of household. Section 2(b) defines “head
of household”, in relevant part, as an individual taxpayer who
(1) is not married at the close of the taxable year, and (2)
maintains as her home a household that constitutes for more than
one-half of the taxable year the principal place of abode of a
son or daughter of the taxpayer. Sec. 2(b)(1)(A)(i). A taxpayer
maintains a household if the taxpayer pays more than one-half of
the total cost to maintain the household, including such items as
property taxes, mortgage interest, utility charges, and food.
Sec. 1.2-2(d), Income Tax Regs.
Petitioner failed to establish adequately that she
maintained a household during 2001. She provided some
documentation, including a phone bill and rental agreement, but
she did not demonstrate her contribution to total household
expenses. Thus, regardless of petitioner’s marital status,
2
Under some circumstances, the burden of proof shifts to
respondent under sec. 7491. That burden does not shift to
respondent in this case because petitioner failed to maintain
records and comply with the requirements of substantiation as
required by sec. 7491(a)(2).
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discussed infra, petitioner failed to establish her entitlement
to head-of-household filing status under section 1.2-2(d), Income
Tax Regs.
Section 151(c) allows dependency exemption deductions for
each dependent as defined in section 152(a). Section 152(a)
defines a dependent as an individual over half of whose support
was received from the taxpayer. Eligible individuals who may be
claimed as dependents include a son or daughter of the taxpayer.
In determining whether an individual received over half of his
support from the taxpayer, “there shall be taken into account the
amount of support which the individual received from all sources,
including support which the individual himself supplied.” Sec.
1.152-1(a)(2)(i), Income Tax Regs. Petitioner must demonstrate
through competent evidence the total amount of support from all
sources available during the year in issue. Blanco v.
Commissioner, 56 T.C. 512, 514-515 (1971). If petitioner fails
to provide this information, this Court cannot conclude that the
taxpayer claiming the exemption provided more than one-half of
the support of the claimed dependent.
Petitioner testified that Yia Her, the father of her six
children, moved out of her residence in December 2000; that the
three children she claimed as dependents lived with her during
2001; and that the other three children lived with their father,
Mr. Her. Petitioner also testified that she had never been
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married to Mr. Her. Based on the available evidence, it is not
unreasonable for the Court to conclude that Mr. Her, as their
father, provided some support during 2001 for the children who
were living with petitioner. Since petitioner failed to
demonstrate the total support provided by Mr. Her and herself,
the Court cannot determine whether her contributions constituted
more than half of the total support provided to the children
during 2001. The Court, therefore, holds that petitioner is not
entitled to the dependency exemption deductions for 2001.
The Court also agrees with respondent that petitioner is not
entitled to the earned income credit. Section 32(a) provides for
an earned income credit in the case of an eligible individual.
Section 32(c)(1)(A), in relevant part, defines an “eligible
individual” as an individual who has a qualifying child for the
taxable year. A qualifying child is one who satisfies a
relationship test, a residency test, an age test, and an
identification requirement. Sec. 32(c)(3). In order to satisfy
the residency test, the qualifying child must have the same
principal place of abode as the taxpayer for more than one-half
of the taxable year in which the credit is claimed. Sec.
32(c)(3)(A)(ii). Section 32(d) provides, however, that a married
individual, within the meaning of section 7703, may claim the
earned income credit only if a joint return is filed for the
taxable year at issue.
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Although petitioner testified that she has never been
married to Mr. Her, she filed a return as married, filing
jointly, with Mr. Her, for the taxable years 1996, 1997, and
2000. Mr. Her received his Form W-2 statements and unemployment
benefits at petitioner’s residence in 2001. A 2003 property
transfer record recites that petitioner was a “married woman”.
The evidence leads the Court to conclude that petitioner was
married in 2001, despite her testimony to the contrary. Under
section 7703(b)(3), a taxpayer who maintains as a home a
household that constitutes the principal place of abode for more
than one-half of the year of a child for whom the taxpayer is
entitled to a deduction under section 151 is deemed to be “not
married” if, during the last 6 months of the year at issue, the
other spouse did not reside with the taxpayer. As previously
discussed, petitioner did not establish that she maintained a
household or that she is entitled to the dependency exemptions.
Petitioner, therefore, does not satisfy the requirements of
section 7703(b). The Court holds that petitioner is not entitled
to the earned income credit because she failed to file a joint
return with Mr. Her.
Section 21(a) generally provides allowance for a credit
against the tax to any individual who maintains a household that
includes as a member one or more qualifying individuals. The
term “qualifying individual”, under section 21(b), includes a
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dependent of the taxpayer under age 13, with respect to whom the
taxpayer is entitled to a dependency deduction under section
151(c). The allowable credit, under section 21(b)(2), generally
is based upon employment-related expenses that are incurred to
enable the taxpayer to be gainfully employed, including expenses
incurred for the care of a qualifying individual. Petitioner did
not establish either that she maintained a household or that she
incurred employment-related expenses for the children, and, as
the Court holds that she is not entitled to dependency exemption
deductions for the three children, it follows that she is not
entitled to the section 21 child care credit.
Finally, taxpayers who are allowed a dependency exemption
deduction under section 151 may be allowed a child tax credit
under section 24. As stated above, the Court sustains
respondent’s determination that petitioner was not entitled to
deduct dependency exemptions for the three children who lived
with her. Because petitioner is not entitled to the dependency
exemption deductions, she is not entitled to the child tax credit
under section 24.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.