T.C. Summary Opinion 2006-185
UNITED STATES TAX COURT
DONTEZ R. PARKS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15672-05S. Filed December 7, 2006.
Dontez R. Parks, pro se.
Terry Serena, 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 at 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 $3,215 for taxable year 2004. The issues for
decision are: (1) Whether petitioner is entitled to a dependency
exemption deduction for his niece, BMB;1 (2) whether petitioner
is entitled to an earned income credit; and (3) whether
petitioner is entitled to both a child tax credit and an
additional child tax credit.
Background
Some of the facts were stipulated and are so found. The
stipulation of facts and attached exhibits are incorporated
herein by reference.
At the time the petition was filed, petitioner resided in
Miamisburg, Ohio.
During the taxable year 2004, petitioner held several jobs.
He worked for Burlington Coat Factory, Extra Help Staffing, and
American Building Maintenance Company (ABM) earning $1,976, $31,
and $10,065, respectively.
During the greater part of 2004, petitioner worked for ABM
as an office cleaner at a building that was located across the
street from an apartment he lived in with his girlfriend,
Trueshonda Carmicle (Ms. Carmicle). Petitioner’s daily work
shift was from 5:30 p.m. until 2:00 a.m. He worked for ABM from
March 2003 until sometime in 2005.
1
The Court uses only the initials of the minor child.
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Ms. Carmicle worked at a YMCA located near her home in an
after-school program for 3 to 4 hours per day. From the income
derived from her job, Ms. Carmicle helped pay for the rent, food,
and other expenses she shared with petitioner.
Petitioner has a sister, Unique Parks (Ms. Parks), who lives
in Lima, Ohio, with her mother. Ms. Parks had a child, BMB, who
was born on December 4, 2003. Following the birth of her child,
Ms. Parks began experiencing difficulty in school and was
required by school officials to attend summer classes. Because
Ms. Parks was required to attend extra tutoring and, eventually,
summer school, care for her child fell upon petitioner’s mother.
Subsequently, petitioner’s mother found it difficult to care for
Ms. Parks and BMB in addition to her employment as a nursing home
aide, and her guardianship of several foster children residing
already at her residence.
BMB’s father has been generally uninvolved with his child
since her birth and has not provided any form of financial
assistance. Ms. Parks began receiving assistance vouchers, known
as “WIC”, for her and her baby. The vouchers entitled Ms. Parks
to a monthly amount of food items such as milk, eggs, cheese,
cereal, and juice. Ms. Parks also received Medicaid benefits
that entitled BMB to medical care.
Petitioner’s niece, BMB, came to live with petitioner and
Ms. Carmicle sometime in late May 2004. Ms. Carmicle would often
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take the child to work with her at the YMCA. If the child was
not with Ms. Carmicle, petitioner would watch BMB after he
returned home from work in the early morning.
In early 2004, petitioner and Ms. Carmicle resided in a one-
bedroom apartment in Fairborn, Ohio. On December 28, 2004,
petitioner and Ms. Carmicle had their first child. Around this
time, petitioner and Ms. Carmicle moved to a new residence in
Miamisburg, Ohio.
On his 2004 tax return, petitioner claimed a dependency
exemption deduction, an earned income credit, and both a child
tax credit and an additional child tax credit with respect to
BMB. Respondent disallowed the dependency exemption deduction
claimed by petitioner because petitioner did not show that he
provided over half of the support for BMB or that BMB resided
with him for over one-half of the year. As a result of the
disallowance, respondent further disallowed both the claimed
earned income credit and child care credits.
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 provides credible evidence with respect to any factual
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issue relevant to ascertaining the proper tax liability, section
7491 places the burden of proof on the Commissioner. Sec.
7491(a); Rule 142(a)(2). Credible evidence is “‘the quality of
evidence which, after critical analysis, the court would find
sufficient * * * to base a decision on the issue if no contrary
2
evidence were submitted’”. Baker v. Commissioner, 122 T.C.
143, 168 (2004) (quoting Higbee v. Commissioner, 116 T.C. 438,
442 (2001)). Section 7491 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).
With respect to the instant matter, petitioner has not
raised an argument with respect to shifting the burden of proof
under section 7491. Further, petitioner has not shown that he
complied with the threshold requirements thereafter. Respondent,
on the other hand, argues that petitioner has not fully
cooperated with respondent’s requests for information, documents,
and meetings. The Court concludes on this record that the burden
of proof remains on petitioner. Therefore, petitioner bears the
burden of showing that he is entitled to a dependency exemption
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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deduction, that he is entitled to an earned income credit, and
that he is entitled to a child tax credit for the year at issue.
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. Section
152(a) defines the term “dependent”, in pertinent part, to
include “A son or daughter of a brother or sister of the
taxpayer”. Sec. 152(a)(6).
To prevail on this issue, petitioner must show by competent
evidence that: (1) the individual claimed satisfies the
definitional requirements provided in section 152(a) (the
relationship requirement); (2) the amount of total support
provided for the individual claimed; and (3) he provided more
than half of such support (taken together, the support
requirement). See secs. 151(c)(1)(A), 152(a).
In this instance, the claimed individual, BMB, satisfies the
definitional requirement of “dependent” within the meaning of
section 152(a)(6). Specifically, BMB is the daughter of
petitioner’s sister. Accordingly, the remaining issue is whether
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petitioner provided more than one-half of his niece’s total
support for 2004.
For this purpose, “support” is defined as including food,
shelter, clothing, medical and dental care, education, etc. See
sec. 1.152-1(a)(2)(i), Income Tax Regs. Section 1.152-
1(a)(2)(i), Income Tax Regs., which provides:
For purposes of determining whether or not an
individual received, for a given calendar year, over
half of his 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,
including support which the individual himself
supplied. * * *
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. Thus, 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. 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).
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Petitioner testified that BMB resided with him from May 2004
until March 2005. With respect to the amounts provided for his
niece’s support, petitioner explained that, due to an overcharge
on his bank account, he was required to deposit his paychecks in
his girlfriend’s account. He testified that he gave Ms. Parks
approximately $100 every 2 weeks to support his niece, BMB.
Petitioner further testified that he bought BMB clothes,
food, and diapers. He estimated that he spent $30-35 per week
for food for BMB. Petitioner also stated that he purchased $30
worth of disposable diapers in a box that would last
approximately a month. According to petitioner, Ms. Carmicle
would also purchase baby clothes for BMB.
At trial, Ms. Parks confirmed that BMB went to live with
petitioner in May 2004, while she attended summer school, which
ended in July 2004. For a 1 month period between summer school
and the start of the school year in August, BMB “came and stayed
for a little bit.” According to Ms. Parks, BMB “sometimes”
stayed with her at her mother’s house during weekends after the
start of the school year. Ms. Parks also testified that her
mother would help financially when she could. In Ms. Parks’
estimation, it cost about $100 per month to support BMB.
We find petitioner’s testimony to be credible as to the fact
that he provided support for his niece. We also find
petitioner’s sister to be credible as well. However, the record
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as to the actual amounts provided by petitioner for the care of
the child is distressingly vague and incomplete.
In this regard, petitioner did not keep records of how much
he spent on BMB. While petitioner was able to partially
reconstruct for the Court an approximate dollar amount of total
support provided for his niece, there is no documentation with
respect to the expended funds. In addition, petitioner’s mother
apparently provided some financial support for BMB, although
there is also no accounting for these funds. Moreover,
petitioner’s sister received “WIC” vouchers and Medicaid.
Petitioner also acknowledged that Ms. Carmicle contributed
towards rent, food, and other incidental household items as well
as for some of BMB’s expenses. Thus, we cannot clearly say that
petitioner has established the total amount of support for BMB in
taxable year 2004.
Petitioner attempted to show that he provided over half of
the support for BMB by submitting his paychecks from ABM as well
as bank account statements in Ms. Carmicle’s name. However, the
deposits to the bank account do not appear to correlate with
petitioner’s paychecks. From the information before us, we
discern that petitioner deposited two ABM checks in Ms.
Carmicle’s bank account. The two checks are: (1) October 16,
2004, in the amount of $477.51, which was deposited on October
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25, 2004; and (2) November 12, 2004, in the amount of $419.76,
which was deposited on December 3, 2004.3
We are convinced that, during 2004, petitioner paid expenses
on behalf of BMB and was a caring uncle to his niece. However,
petitioner has failed to provide the Court with any significant
corroborative evidence establishing the total amount of support
or that he provided over half of BMB’s support during the 2004
tax year.
Upon the basis of the record before us, respondent’s
determination on this issue is sustained.
B. Earned Income Credit
As previously stated, petitioner claimed an earned income
credit for taxable year 2004 with BMB 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
3
A difficulty is that for about half of the ABM paychecks,
the reported amounts are for “gross” with the “net” amounts cut
off in the joint exhibits. Even taking into account net income
calculations, the amounts still do not correspond with the
amounts deposited. For some of the ABM paychecks that clearly
report net income, there are no corresponding bank deposit
statements. For example, there are no statements for June, July,
September, and December 2004.
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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).
As relevant herein, a descendant of a brother or sister who
the taxpayer cares for as the taxpayer’s own child satisfies the
relationship test. Sec. 32(c)(3)(B)(i)(II). Therefore, we are
willing to assume that BMB satisfies the relationship test.
However, although we find petitioner’s testimony credible
that BMB did reside in his residence in Miamisburg, Ohio, for a
period of time in 2004, petitioner did not establish that his
residence was the principal place of abode for BMB for more than
one-half of the taxable year 2004. Ms. Parks’s testimony shows
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that BMB frequently stayed with her at her mother’s house in
Lima, Ohio. We find that BMB fails the residency test of section
32(c)(3)(ii). Accordingly, respondent’s determination on this
issue is sustained.
C. Child Tax Credit
As previously stated, petitioner claimed a child tax credit
and an additional child tax credit for the tax year 2004 with BMB
as the qualifying child. In the notice of deficiency, respondent
disallowed both the child tax and the additional child tax
credits with respect to BMB.
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 BMB.
Accordingly, BMB 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).
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D. Additional Child Tax Credit
The child tax credit is a nonrefundable personal credit that
was added to the Internal Revenue Code by the Taxpayer Relief Act
of 1997, Pub. L. 105-34, sec. 101(a), 111 Stat. 796, with a
provision for a refundable credit, the additional child tax
credit, for families with three or more children. For taxable
years beginning after December 31, 2000, the additional child tax
credit provision was amended to remove the restriction that only
families with three or more children are entitled to claim the
credit. See sec. 24(d)(1); Economic Growth and Tax Relief
Reconciliation Act of 2001, Pub. L. 107-16, sec. 201(c)(1), 115
Stat. 46.
In the absence of other nonrefundable personal credits, a
taxpayer is allowed to claim a child tax credit in an amount that
is the lesser of the full child tax credit or the taxpayer’s
Federal income tax liability for the taxable year. See sec.
26(a). If the child tax credit exceeds the taxpayer’s Federal
income tax liability for the taxable year, a portion of the child
tax credit may be refundable as an additional child tax credit
under section 24(d)(1). The refundable and nonrefundable
portions of the child tax credit cannot exceed the total
allowable amount of the credit.
Petitioner is not entitled to claim an additional child tax
credit because he did not qualify for a child tax credit.
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In view of the foregoing, we sustain respondent’s
determination on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.