T.C. Summary Opinion 2006-98
UNITED STATES TAX COURT
SHAUN DION BRANDON, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19975-04S. Filed July 5, 2006.
Shaun Dion Brandon, pro se.
Robert Mopsick, 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.
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Respondent determined a deficiency in petitioner’s Federal
income tax of $3,677 for the taxable year 2003. The issues for
decision are: (1) Whether petitioner is entitled to a dependency
exemption deduction for his nephew; (2) whether petitioner is
entitled to head-of-household status; (3) whether petitioner is
entitled to an earned income credit; and (4) whether petitioner
is entitled to a child care credit.
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. At the time the petition
was filed, petitioner resided in South Orange, New Jersey.
During taxable year 2003, petitioner resided in a third-
floor apartment in a multifamily residence in Newark, New Jersey.
Forms W-2 included as part of the underlying record show that
during taxable year 2003, petitioner was employed by both
Goldring Gulf Distributing of Fort Walton, Florida, and Five Star
Carting of Brooklyn, New York, and had listed addressess for each
in Navarre, Florida, and Brooklyn, New York, respectively. In
addition to the aforementioned addresses, petitioner listed his
address on his 2003 Form 1040, U.S. Individual Income Tax Return,
as South Orange, New Jersey. Petitioner resided at the Newark,
New Jersey, address for 7 to 9 months of the taxable year 2003,
with the additional addresses in Florida and New York being that
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of his former residence and the residence of his fiancee,
respectively. Petitioner was single throughout the taxable year
2003.
In either late 2002 or early 2003, a fire destroyed an
apartment building where petitioner’s sister, Monique Brandon,
resided with her three minor children. In the aftermath of the
fire, the eldest child, SAB,1 came to live with petitioner in his
residence at 40 Mapes Avenue in Newark, New Jersey. During this
time, petitioner assisted his nephew, providing food and shelter
and, on some occasions, financial aid. Although additional
financial support was provided to petitioner from petitioner’s
mother and grandmother, neither the child’s mother nor his father
provided any financial support to the child or petitioner. SAB
returned to his mother’s residence in Orange, New Jersey, at some
time before the start of the 2003-2004 school year.
Petitioner reported wage income of $16,868 in 2003. On his
2003 Federal income tax return, petitioner claimed a dependency
exemption deduction for SAB, an earned income credit deduction,
and an additional child care tax credit. Petitioner also filed
as head of household on his 2003 Federal income tax return.
Respondent disallowed the dependency exemption deduction on
the ground that petitioner failed to establish that he provided
1
The Court uses only the initials of the minor child.
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over half of the support for SAB. As a result of the
disallowance, respondent further determined that petitioner’s
filing status was single, not head of household, and disallowed
both the claimed earned income credit and the child care credit.
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
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
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.
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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 this case. Therefore, petitioner bears the
burden of showing that he is entitled to claim a dependency
exemption deduction for SAB; that he is entitled to head-of-
household filing status; that he is entitled to an earned
income credit for taxable year 2003; and that he is entitled to a
child tax credit for taxable year 2003.
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).
A. Dependency Exemption
Section 151(c) allows a taxpayer to deduct an annual
exemption amount for each dependent of the taxpayer. A
“dependent” is defined under section 152(a) as an individual
“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)”.
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In order to prevail, petitioner must show by competent
evidence: (1) The dependent claimed satisfies the definitional
requirements provided in section 152(a) (the relationship
requirement); (2) the amount of total support provided for the
child claimed, and (3) that he provided more than half of such
support (taken together, the support requirement). See secs.
151(c)(1)(A), 152(a).
The claimed individual satisfies the definitional
requirement of “dependent” within the meaning of section 152(a)
under the relationship test as the nephew of petitioner. Sec.
152(a)(6). Accordingly, the remaining issue is whether the
petitioner provided more than one-half of his nephew’s total
support for 2003.
“Support” may include: food, shelter, clothing, medical and
dental care, education, etc. See sec. 1.152-1(a)(2)(i), Income
Tax Regs. The amount of total support provided by the taxpayer
may be reasonably inferred from competent evidence. See Stafford
v. Commissioner, 46 T.C. 515, 518 (1966). However, where an
actual amount of total support of a child during the taxable year
is not shown and cannot be reasonably inferred from competent
evidence, then it is not possible to conclude that the taxpayer
has contributed more than one-half. See Blanco v. Commissioner,
56 T.C. 512, 515 (1971); Fitzner v. Commissioner, 31 T.C. 1252,
1255 (1959).
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Although we find petitioner’s testimony credible as to the
fact that he provided support for his nephew in the aftermath of
a fire which destroyed the child’s maternal home, the record
based solely on the testimony proffered is vague and incomplete.
Petitioner has not kept records of how much he spent on SAB, nor
could he reconstruct for the Court a dollar amount of total
support provided for his nephew. Petitioner also testified at
trial that other family members, including his mother and
grandmother, provided financial support for SAB, although he
could not offer an accounting for these funds. While we find
that petitioner made valiant efforts to sustain and support his
nephew in the aftermath of a family tragedy, petitioner
nonetheless failed to meet the statutorily imposed requirement to
establish the amount of his contributions to the support of SAB
during the taxable year 2003. Because petitioner failed to
establish the total amount of support from all sources, we are
unable to conclude that petitioner provided more than one-half of
the total support for SAB, and therefore we sustain respondent on
this issue.
B. 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.
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Section 1(b) imposes a special income tax rate on an
individual filing as head of household. As relevant herein,
section 2(b) defines “head of household” as an unmarried
individual who maintains as his or her home a household which
constitutes for more than one-half of the taxable year the
principal place of abode of “any other person who is a dependent
of the taxpayer, if the taxpayer is entitled to a deduction for
the taxable year for such person under section 151”. Sec.
2(b)(1)(A)(ii).
We have already held that petitioner is not entitled to the
dependency exemption deduction pursuant to section 151 with
respect to SAB. It follows, accordingly, that petitioner is not
entitled to head of household filing status. Therefore, we
sustain respondent’s determination with respect to this issue.
C. Earned Income Credit
Petitioner claimed an earned income credit for taxable year
2003 with SAB as the qualifying child. In the notice of
deficiency, respondent disallowed the earned income credit.
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
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“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).
As relevant herein, a descendant of the taxpayer’s brother
or sister, whom the taxpayer cares for as his own child,
satisfied the relationship test. Sec. 32(c)(3)(B)(i)(II).
Therefore, we are willing to assume that SAB satisfies the
relationship test.
However, although we find petitioner’s testimony credible
that SAB did reside at his residence in Newark, New Jersey, for a
period of time in 2003, petitioner did not offer into evidence
any documentation or any testimony to establish that such period
was more than one-half of the year.
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D. Child Tax Credit
Petitioner claimed a child tax credit for the taxable year
2003 with SAB as the qualifying child. In 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 to these facts,
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 the
dependency exemption deduction under section 151 for SAB.
Accordingly, SAB is not considered a “qualifying child” within
the meaning of section 24(c). It follows, therefore, that
petitioner is not entitled to a child tax credit under section
24(a).
In view of the foregoing, we sustain the respondent’s
determination on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.