T.C. Summary Opinion 2005-168
UNITED STATES TAX COURT
ANDRE L. WILSON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15788-04S. Filed November 15, 2005.
Andre L. Wilson, pro se.
Amy Dyar Seals, for respondent.
GOLDBERG, 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, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
- 2 -
Respondent determined a deficiency in petitioner’s Federal
income tax of $4,766 for the taxable year 2003.
The issues for decision are: (1) Whether petitioner is
entitled to claim dependency exemption deductions for KO and NW;1
(2) whether petitioner is entitled to head-of-household filing
status; (3) whether petitioner is entitled to an earned income
credit; and (4) whether petitioner is entitled to a child tax
credit for taxable year 2003.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Estill, South Carolina, on the date the petition was filed in
this case.
During taxable year 2003, petitioner was involved in a
romantic relationship with Sandra Orr (Ms. Orr). Ms. Orr had two
children, KO and NW, from prior relationships. KO and NW lived
with Ms. Orr during taxable year 2003.
Ms. Orr did not work during taxable year 2003. During
taxable year 2003, Ms. Orr was entitled to receive $62 per week
in child support from KO’s father. KO and NW had health
insurance for taxable year 2003 through Medicare and/or Medicaid;
neither petitioner nor Ms. Orr made payments for this health
1
The Court uses only the minor children’s initials.
- 3 -
insurance. During 2003, Ms. Orr, KO, and NW received the
following financial benefits: (1) Food stamps for Ms. Orr and
her children; (2) a settlement from Social Security of
approximately $6,000 “after they took out for the lawyers” for a
disability suffered by Ms. Orr; and (3) $152 per month in Social
Security benefits as a result of NW’s father being deceased. As
a result of these benefits, NW received a Form SSA-1099, Social
Security Benefit Statement, for taxable year 2003 which reported
benefits received of $1,824.
In 2003, KO, who was 17 years old and a high school senior,
was employed by Shell-Mark Enterprises and Marshalls of
Massachusetts, Inc. Shell-Mark issued to KO a Form W-2, Wage and
Tax Statement, which reflected wages earned of $5,173 for taxable
year 2003. Marshalls of Massachusetts, Inc., issued to KO a Form
W-2 which reflected wages earned of $678 for taxable year 2003.
During taxable year 2003, petitioner was employed as a
roofer by Roofing Professionals, Inc. (Roofing) and Low Country
Roofing, Inc. (Low Country). Roofing and Low Country each issued
to petitioner a Form W-2 which reflected wages earned during
taxable year 2003 of $9,636 and $9,210, respectively.
Petitioner timely filed his Form 1040, U.S. Individual
Income Tax Return, for taxable year 2003 as a head of household
and claimed dependency exemption deductions for KO and NW.
Petitioner also claimed an earned income credit with KO and NW as
- 4 -
qualifying children and a child tax credit with KO and NW as
qualifying children.
On the face of his Form 1040, petitioner claims that these
children are his foster children. However, petitioner is not
related to either child and is not married to their mother.
Furthermore, these children were not placed with him by an
authorized child placement agency.
On September 7, 2004, respondent issued a notice of
deficiency denying petitioner: (1) The claimed dependency
exemption deductions; (2) head-of-household filing status; (3)
the claimed earned income credit; and (4) the claimed child tax
credit for taxable year 2003.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct. Welch v. Helvering,
290 U.S. 111, 115 (1933). In pertinent part, Rule 142(a)(1)
provides the general rule that “The burden of proof shall be upon
the petitioner”. In certain circumstances, however, if the
taxpayer introduces credible evidence with respect to any factual
issue relevant to ascertaining the proper tax liability, section
7491 places the burden of proof on the Commissioner. Sec.
7491(a)(1); Rule 142(a)(2). Credible evidence is “‘the quality
of evidence which, after critical analysis, * * * [a] court would
find sufficient * * * to base a decision on the issue if no
- 5 -
contrary evidence were submitted’”.2 Baker v. Commissioner, 122
T.C. 143, 168 (2004) (quoting Higbee v. Commissioner, 116 T.C.
438, 442 (2001)). Section 7491(a)(1) applies only if the
taxpayer complies with substantiation requirements, maintains all
required records, and cooperates with the Commissioner for
witnesses, information, documents, meetings, and interviews.
Sec. 7491(a)(2). Although neither party alleges the
applicability of section 7491(a), we conclude that the burden of
proof has not shifted to respondent with respect to any of the
issues in the case at bar.
Moreover, deductions are a matter of legislative grace and
are allowed only as specifically provided by statute. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934).
1. Deduction for Dependency Exemption
Section 151 allows deductions for exemptions for dependents
of the taxpayer. See sec. 151(c). Section 152(a) defines the
term “dependent”, in pertinent part, to include “An individual *
* * who, for the taxable year of the taxpayer, has as his
principal place of abode the home of the taxpayer and is a member
of the taxpayer’s household * * * over half of whose support, for
2
We interpret the quoted language as requiring the
taxpayer’s evidence pertaining to any factual issue to be
evidence the Court would find sufficient upon which to base a
decision on the issue in favor of the taxpayer. See Bernardo v.
Commissioner, T.C. Memo. 2004-199.
- 6 -
the calendar year * * * was received from the taxpayer”.
“Support” includes “food, shelter, clothing, medical and dental
care, education, and the like.” Sec. 1.152-1(a)(2)(i), Income
Tax Regs.
In determining whether an individual received more than one-
half of his or her support from the taxpayer, there shall be
taken into account the amount of support received from the
taxpayer as compared to the entire amount of support which the
individual received from all sources. Id. In other words, the
support test requires the taxpayer to establish the total support
costs for the claimed individual and that the taxpayer provided
at least half of that amount. Archer v. Commissioner, 73 T.C.
963, 967 (1980); see Cotton v. Commissioner, T.C. Memo. 2000-333;
Gulvin v. Commissioner, T.C. Memo. 1980-111, affd. 644 F.2d 2
(5th Cir. 1981); Toponce v. Commissioner, T.C. Memo. 1968-101. A
taxpayer who cannot establish the total amount of support costs
for the claimed individual generally may not claim that
individual as a dependent. Blanco v. Commissioner, 56 T.C. 512,
514-515 (1971); Cotton v. Commissioner, supra.
As previously stated, on his 2003 Federal income tax return,
petitioner claimed dependency exemption deductions for KO and NW.
Petitioner testified that he has lived with Ms. Orr and her
children, KO and NW, from taxable year 2000 through the date of
trial (February 2005). Petitioner further testified that (1) the
- 7 -
residence which petitioner claims he, Ms. Orr, and her children
live in is solely in Ms. Orr’s name, and (2) that the bills which
result from the residential expenses are also only in Ms. Orr’s
name.
Petitioner’s legal address is still listed as his parents’
address. Petitioner testified that he has not changed his legal
address since moving in with Ms. Orr because Ms. Orr’s residence
is not equipped to receive mail. Petitioner claims that he and
Ms. Orr are in the process of obtaining a post office box.
Petitioner also testified that he supported KO and NW during
taxable year 2003. However, petitioner failed to provide the
Court with any significant corroborative evidence showing that he
provided over half of KO and NW’s support during the 2003 taxable
year.
Upon the basis of the record before us, we find that
petitioner has not established that his home during taxable year
2003 was the principal place of abode of KO and NW. Further, we
find that petitioner has failed to establish the total support
costs for the claimed individuals, KO and NW, and that he
provided at least half of that amount. Respondent’s
determination on this issue is sustained.
- 8 -
2. Head of Household
As previously stated, petitioner filed his 2003 Federal
income tax return as a head of household, and respondent changed
the filing status to single in the notice of deficiency.
Section 1(b) imposes a special income tax rate on an
individual filing as head of household. Section 2(b) provides
the requirements for head-of-household filing status. As
relevant here, to qualify as a head of a household a taxpayer
must (a) be unmarried at the end of the taxable year, (b) not be
a surviving spouse, and (c) maintain as the taxpayer’s home a
household that constitutes the principal place of abode of a
dependent for whom the taxpayer is entitled to claim a deduction
under section 151. Sec. 2(b)(1)(A)(ii).
We have already held that petitioner is not entitled to the
dependency exemption deductions pursuant to section 151 with
respect to KO and NW. It follows, therefore, that petitioner is
not entitled to claim head-of-household filing status. We
sustain respondent’s determination with respect to this issue.
3. Earned Income Credit
As previously stated, petitioner claimed an earned income
credit for taxable year 2003 with KO and NW as qualifying
children. In the notice of deficiency, respondent disallowed the
earned income credit.
- 9 -
Subject to certain limitations, an eligible individual is
allowed a credit which is calculated as a percentage of the
individual’s earned income. Sec. 32(a)(1). Earned income
includes wages. Sec. 32(c)(2)(A). 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” is one who satisfies a relationship test, a
residency test, and an age test. Sec. 32(c)(3). The pertinent
parts of section 32(c)(3) provide:
(3) Qualifying child.--
(A) In general.--The term “qualifying child” means,
with respect to any taxpayer for any taxable year, an
individual--
(i) who bears a relationship to the taxpayer
described in subparagraph (B),
(ii) who has the same principal place of abode as
the taxpayer for more than one-half of such taxable
year, and
(iii) who meets the age requirements of
subparagraph (C).
(B) Relationship test.--
(i) In general.--An individual bears a
relationship to the taxpayer described in this
subparagraph if such individual is–-
(I) a son, daughter, stepson, or
stepdaughter, or descendant of any such
individual,
(II) a brother, sister, stepbrother, or
stepsister, or a descendant of any such
individual, who the taxpayer cares for as the
taxpayer’s own child, or
- 10 -
(III) an eligible foster child of the
taxpayer.
* * * * * * *
(iii) Eligible foster child.--For purposes of
clause (i), the term “eligible foster child” means an
individual not described in subclause (I) or (II) of
clause (i) who--
(I) is placed with the taxpayer by an
authorized placement agency, and
(II) the taxpayer cares for as the taxpayer’s
own child.
As previously stated, petitioner has not established that
his home during taxable year 2003 was the principal place of
abode for KO and NW for more than one-half of the taxable year.
Further, as previously stated, petitioner is not related to
either child, he is not married to their mother, and these
children were not placed with him by an authorized placement
agency. We find that KO and NW fail the residency test of
section 32(c)(3)(A)(ii) and the relationship test of section
32(c)(3)(B); therefore, we need not and do not decide whether
they satisfy the age test under section 32(c)(3).
Accordingly, respondent’s determination on this issue is
sustained.
4. Child Tax Credit
As previously stated, petitioner claimed a child tax credit
for taxable year 2003 with KO and NW as qualifying children. In
- 11 -
the notice of deficiency, respondent disallowed the child tax
credit.
Section 24(a) authorizes a child tax credit with respect to
each “qualifying child” of the taxpayer. The term “qualifying
child” is defined in section 24(c). As relevant here, a
“qualifying child” means an individual with respect to whom the
taxpayer is allowed a deduction under section 151. Sec.
24(c)(1)(A).
We have already held that petitioner is not entitled to
dependency exemption deductions under section 151 for KO and NW.
Accordingly, KO and NW are not considered “qualifying children”
within the meaning of section 24(c). It follows, therefore, that
petitioner is not entitled to a child tax credit under section
24(a) with respect to KO and NW.
In view of the foregoing, we sustain respondent’s
determination on this issue.
Furthermore, we have considered all of the other arguments
made by petitioner, and, to the extent that we have not
specifically addressed them, we conclude they are without merit.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.