T.C. Summary Opinion 2006-113
UNITED STATES TAX COURT
CYRUS BARTHOLOMEW DAZZEL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11666-04S. Filed July 18, 2006.
Cyrus Bartholomew Dazzel, pro se.
Robert Saal, 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 $4,499 for the taxable year 2003. At trial,
petitioner conceded a previously claimed exemption for Shawnette
Starks (Ms. Starks). Four issues for decision remain: (1)
Whether petitioner is entitled to dependency exemption deductions
for MS and YS,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.
Background
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and attached exhibits are
incorporated herein by this reference. At the time of filing the
petition, petitioner resided in Orange, New Jersey.
During the year at issue, petitioner resided in Orange, New
Jersey, in a residence he purchased in 2001, and worked as a
self-employed carpenter.
Petitioner began dating Ms. Starks sometime during 1999.
Also in 1999, Ms. Starks gave birth to MS. Petitioner and Ms.
Starks were not living together at the time MS was born.
Petitioner was not present at the hospital at the time of the
birth, and no father was listed on MS’s birth certificate.
1
The Court uses the minor children’s initials.
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In 2002, Ms. Starks gave birth to YS. Following the birth,
Ms. Starks resided with her mother in Brooklyn, New York. No
father was listed on YS’s birth certificate. Hospital records
for Ms. Starks’s labor and delivery indicate her address is the
same as her mother’s in Brooklyn, New York. Although petitioner
and Ms. Starks have lived together intermittently since 1999,
including the year at issue, they have never been married.
Petitioner timely filed his Form 1040, U.S. Individual
Income Tax Return, for taxable year 2003. In his Federal income
tax return, petitioner claimed MS and YS as dependents.
Petitioner also claimed head of household filing status, an
earned income credit, and a child tax credit.
On June 7, 2004, respondent issued a notice of deficiency
denying petitioner: (1) The claimed dependency exemptions; (2)
head of household filing status; (3) an earned income credit,
and; (4) a child tax credit for taxable year 2003. Petitioner
timely filed the underlying petition in this case on July 6,
2004.
Discussion
Generally, the Commissioner’s determination of a deficiency
is presumed correct, and the taxpayer bears the burden of proving
that the determination is improper. Rule 142(a)(1); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Deductions are a matter of
legislative grace, and the taxpayer bears the burden of proving
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that he is entitled to any claimed deductions. New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934). This includes the
burden of substantiation. Hradesky v. Commissioner, 65 T.C. 87,
89-90 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).
Although section 7491 may shift the burden of proof to respondent
in specified circumstances, petitioner here has not established
that he meets the prerequisites under section 7491(a)(1) and (2)
for such a shift.
I. Dependency Exemptions
In general, a taxpayer is allowed as a deduction an exemption
for every dependent. Sec. 151(a),(c). A child of a taxpayer is
a dependent if the requirements of section 151(c)(1) are met, and
the taxpayer contributed over one-half of the support for the
child during the taxable year. Sec. 152(a). Accordingly, the
first issue for discussion is whether MS and YS meet the
requirements under section 151 entitling the petitioner to the
claimed dependency deductions.
Both petitioner and Ms. Starks share a belief that petitioner
is the biological parent of MS and YS. Petitioner testified that
the children lived with him in Orange, New Jersey, in 2003 when
they were not otherwise staying with Ms. Starks in her maternal
home in Brooklyn, New York. At trial, Ms. Starks testified that
she, MS, and YS resided apart from petitioner in Brooklyn, New
York. Petitioner asserts that his claimed exemptions for MS and
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YS are appropriate as they are his biological children with Ms.
Starks.
The issue of paternity first came before this Court when the
case was called for trial in June 2005. At that time, although
petitioner maintained his readiness for trial, respondent raised
the issue of the possible production of amended copies of birth
certificates for MS and YS. Petitioner’s subsequent request for
a continuance was granted, with the Judge specifically directing
petitioner to obtain corrected copies of the children’s birth
certificates.
When this case was again called for trial on October 17,
2005, petitioner did not produce corrected birth certificates,
despite being provided 4 months to obtain such copies. Trial was
set for October 20, 2005, in order for petitioner to obtain
corrected copies of the birth certificates. Petitioner testified
at trial that, although he had taken the steps necessary to
obtain corrected birth certificates, new certificates had yet to
be issued.
We do not find petitioner’s testimony credible on this issue.
Petitioner was granted two continuances (the first lasting 4
months) where this Court specifically directed petitioner to
obtain birth certificates to establish his paternal relationship
to MS and YS. Petitioner has not provided any substantiated or
credible evidence that he has sought to have his name added as
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the father of MS and YS on their respective birth certificates.
Moreover, we do not find Ms. Starks’ testimony credible that but
for his running an errand at the time that the birth certificate
for YS was signed in the hospital, petitioner would have been
listed as the father on that birth certificate. Accordingly, we
find that the petitioner has not proven that he is the biological
parent of MS and YS.
Although petitioner has failed to sustain his biological
claims with respect to MS and YS, section 152(a) permits a
dependency deduction for a foster child or an unrelated
individual who has the same principal place of abode as the
taxpayer and is a member of the taxpayer’s household during the
taxable year at issue. Sec. 152(a)(9), (b)(2). Accordingly, the
next inquiry is whether petitioner has shown that the children
principally resided in his Orange, New Jersey, residence during
2003.
We find both inconsistency and irreconcilable vagueness in
the testimony of petitioner and Ms. Starks on the issue of where
the children principally resided during 2003. Specifically,
although Ms. Starks testified that the children only resided in
Brooklyn, New York for 2 months while she recovered from surgery,
petitioner testified that the children stayed with their mother
and grandmother in New York when he was working. Although
petitioner testified that medical costs incurred by the children
in 2003 ranged from six to seven thousand dollars, he did not
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produce any documentation in the form of a medical bill or
statement listing the children’s address as Orange, New Jersey.
Because we cannot conclude that MS and YS meet either the
section 151(c)(3) or 152(a) definition of dependent, we need not
address whether petitioner provided more than one-half of their
support, and accordingly sustain the respondent on this issue.
II. Head of Household 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 a
person who is a dependent of the taxpayer, if the taxpayer is
entitled to a deduction for the taxable year for that dependent
under section 151.
The Court has sustained respondent’s determination
disallowing the claimed dependency exemption deductions, and, as
a result, petitioner is not entitled to head of household filing
status for 2003. Thus, respondent’s determination that
petitioner is not entitled to head of household filing status is
sustained.
III. Earned Income Credit
Section 32(a) provides for an earned income credit in the
case of an eligible individual. Section 32(c)(1)(A)(i), in
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pertinent part, defines an “eligible individual” as any
individual who has a qualifying child for the taxable year.
The Court has determined that the claimed dependents do not
meet the definitional requirements of a qualifying individual.
Sec. 32(c)(3). As a result, petitioner is not entitled to an
earned income credit for 2003. Thus, respondent’s determination
that petitioner is not entitled to an earned income credit is
sustained.
IV. Child Tax Credit
We next consider the child tax credit. A taxpayer may be
entitled to a credit against tax with respect to 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 tine
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, the Court has sustained respondent’s
determination that petitioner is not entitled to dependency
exemption deductions for the children. Thus, petitioner fails
the first prong of the test of section 24. The Court accordingly
sustains respondent’s determination regarding the child tax
credit under section 24.
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Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.