T.C. Summary Opinion 2006-33
UNITED STATES TAX COURT
HUON PEN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17718-02S. Filed February 22, 2006.
Huon Pen, pro se.
Nhi T. Luu-Sanders, for respondent.
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7463 in effect when the petition was filed.1
The decision to be entered in this case is not reviewable by any
other Court, and this opinion should not be cited as authority.
1
Unless otherwise indicated, section references hereafter
are to the Internal Revenue Code in effect for the years at
issue. Sec. 7491 in some instances shifts the burden of proof to
the Commissioner. That section is not applicable in this case
because the issues are legal and not factual.
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Respondent determined a deficiency in petitioner’s Federal
income tax in the amount of $3,308 for 2001.
The issues for decision are whether, for the year 2001,
petitioner is entitled to (1) a dependency exemption deduction
for one child under section 151(c); (2) head-of-household filing
status under section 2(b)(1); and (3) the earned income credit
under section 32(a).2
Some of the facts were stipulated. Those facts, with the
exhibits annexed thereto, are so found and are made part hereof.
Petitioner’s legal residence at the time the petition was filed
was Vancouver, Washington.
On her Federal income tax return for 2001, petitioner
reported total income of $13,285, consisting of $10,363 in salary
and wages, $17 in taxable interest income, and $2,905 in
unemployment compensation. Petitioner deducted two exemptions,
one for herself and the other for her granddaughter, L.H. As
noted supra note 2, petitioner claimed the child care credit, the
child tax credit, the earned income credit, and head-of-household
filing status.
2
Petitioner claimed a child care credit under sec. 21 and
the child tax credit under sec. 24. Both credits are allowable
if the taxpayer is entitled to a dependency exemption deduction
for a child. Accordingly, petitioner’s entitlement to these
credits depends on the Court’s holding on the dependency
exemption deduction issue.
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In the notice of deficiency, respondent disallowed the
dependency exemption deduction for L.H., the child care credit,
the child tax credit, the earned income credit, and petitioner’s
use of head-of-household filing status. The basis for the
disallowed dependency exemption deduction for L.H. was
respondent’s determination that petitioner failed to establish
that she provided more than one-half of the support for L.H. All
the other disallowed items flow from or relate to the disallowed
dependency exemption deduction.
Petitioner’s household for the year at issue included her
daughter, Jenny (the mother of L.H. and another child); her two
sons, Sam and Johnny; Narin Heng, the father of L.H. and the
other child; and petitioner’s husband or ex-husband, Sitha
Thaing. Thus, petitioner had three grown children of her own who
lived in the same place of abode along with Jenny’s two children.
Jenny was gainfully employed during 2001. On her Federal
income tax return for 2001, Jenny claimed L.H. and her other
child as dependents. However, on the subsequent advice of her
accountant and tax return preparer, Jenny filed an amended income
tax return for 2001, on which she did not claim L.H. as a
dependent. The purpose of this amended return was to allow
Jenny’s mother, petitioner, to claim L.H. as a dependent on her
return. Petitioner, accordingly, claimed L.H. as a dependent on
her return.
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In the notice of deficiency, respondent disallowed
petitioner’s dependency exemption deduction for L.H. on the
ground that petitioner failed to establish that she provided more
than half the support for the child.
The record shows that all members of petitioner’s household,
including petitioner, deposited their earnings in one bank
account. All household expenses were paid out of that account.
In the audit of petitioner’s tax return, respondent determined
that, for the year at issue, petitioner’s earnings of $13,285 in
that account and the earnings of the other members of her
household totaled $32,164.59. Respondent further determined that
this account also included assistance payments from the State of
Washington during the year at issue for the benefit of L.H.
These payments were identified at trial as “WIC” payments.
Because this account represented the total income of petitioner
and members of her family, respondent determined that the greater
portion of the support provided to L.H. during the year came from
persons other than petitioner. Thus, respondent determined that
petitioner was not entitled to the dependency exemption deduction
she claimed on her 2001 tax return.
The Court is satisfied from the record and from the evidence
at trial that petitioner did not provide more than one-half the
support of L.H. during the year at issue. The general rule under
section 151 is that the dependency exemption deduction is
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allowable to the taxpayer providing more than one-half of the
total support provided to the dependent during any given year.
Petitioner’s support did not reach that level. Most of the
support came from the other sources described. However, there
was an avenue petitioner could have availed herself of that would
have allowed her to claim the dependency exemption deduction.
She could have obtained a multiple support agreement where all
providers of support to L.H. agreed to allow the dependency
exemption deduction to one of their number. Form 2120, Multiple
Support Agreement, is the proper medium by which this is
accomplished.3
Petitioner did not include such an agreement with her
return; consequently, she is not entitled to the dependency
exemption deduction. Respondent, therefore, is sustained on this
issue.
The next issue is petitioner’s claim to head-of-household
filing status under section 2(b)(1).
3
The Form 2120 is an acknowledgment by a group of
contributors who have collectively provided over one-half of a
dependent’s support for a calendar year and who may annually
designate one of their number to claim the dependency exemption
deduction for the dependent. The taxpayer who is designated as
entitled to claim the dependency exemption deduction must attach
a statement to his or her return identifying each member of the
supporting group and, in general, comply with sec. 1.152-3,
Income Tax Regs.
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Section 2(b) provides generally that an individual shall be
considered a head-of-household if, among other requisites not
pertinent here, such individual maintains as his home a household
that constitutes for more than one-half of such taxable year the
principal place of abode, as a member of such household, of an
unmarried son or daughter of the taxpayer or descendant of the
son or daughter of the taxpayer, or of any other person who is a
dependent of the taxpayer if the taxpayer is entitled to a
dependency exemption deduction for such person under section 151.
Sec. 2(b)(1)(A)(i) and (ii). Petitioner did not establish that
she maintained a household because, under section 2(b), an
individual taxpayer is considered as maintaining a household only
if that individual furnishes more than one-half the cost of
maintaining that household. On the basis of the previous
discussion, the Court concludes that more than one-half of the
cost of maintaining petitioner’s household came from the other
occupants of the home. Petitioner did not maintain the household
and, therefore, is not entitled to head-of-household status under
section 2(b). Respondent, therefore, is sustained on this issue.
The third issue is petitioner’s claim to the earned income
credit under section 32(a). Section 32(a) provides for an earned
income credit in the case of an eligible individual. Section
32(c)(1)(A), in pertinent part, defines an “eligible individual”
as an individual who has a qualifying child for the taxable year.
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Sec. 32(c)(1)(A)(i). A qualifying child is one who satisfies a
relationship test, a residency test, an age test, and an
identification requirement. Sec. 32(c)(3). To satisfy the
relationship and age tests, the qualifying child must be the son
or daughter of the taxpayer or a descendant of either who is less
than 19 years of age or a student whose age is less than 24.
Sec. 32(c)(3)(B)(i), (C). L.H. would appear to satisfy these
requirements.
However, in the consideration of the section 2 head-of-
household issue, the Court has concluded that petitioner failed
to establish that she furnished over half of the cost of
maintaining the household. There were other individuals, as
discussed above, who contributed to the household and to the
support of the child. Section 32(c)(1)(C) provides that where
two or more individuals may claim a qualifying child:
(C) 2 or more eligible individuals. If 2 or more
individuals would (but for this subparagraph and after
application of subparagraph (B)) be treated as eligible
individuals with respect to the same qualifying child for
taxable years beginning in the same calendar year, only the
individual with the highest modified adjusted gross income
for such taxable years shall be treated as an eligible
individual with respect to such qualifying child.
Of all the providers of support to L.H., petitioner failed to
establish that her adjusted gross income was higher than that of
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any one or more of the other providers of support to the child.
Respondent, therefore, is sustained on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.