T.C. Summary Opinion 2007-12
UNITED STATES TAX COURT
ISHMAEL TARIKH, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11571-05S. Filed January 18, 2007.
Ishmael Tarikh, pro se.
Catherine G. Chang, for respondent.
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7463 of the Internal Revenue Code in effect
at the time the petition was filed.1 The decision to be entered
is not reviewable by any other court, and this opinion should not
be cited as authority.
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
year at issue. All Rule references are to the Tax Court Rules of
Practice and Procedure.
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Respondent determined a deficiency of $5,328 in petitioner’s
Federal income tax for the year 2003.
The issues for decision are whether petitioner is entitled
to: (1) Dependency exemption deductions for three children under
section 151; (2) head-of-household filing status under section
2(b); (3) an earned income credit under section 32(a); and (4) a
child tax credit and an additional child tax credit under section
24.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the annexed exhibits are
incorporated herein by reference. At the time the petition was
filed, petitioner resided in Alameda, California.
During the year at issue, petitioner was director of a human
rights project in San Francisco, California. The project
provided lawyer referral services to indigent people and an
advocacy service for victims of police misconduct and abuse.
Petitioner has a degree in political science, a master’s degree
in Afro-American studies, and a juris doctor degree.
Petitioner is the father of three children who were born,
respectively, in 1994, 1996, and 2000. Petitioner and the mother
of the three children never married, and they did not live
together during the year at issue. The children lived with
petitioner for the first 7 months of 2003 (the year at issue) and
lived with their mother for the remainder of the year. During
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the 5 months the children lived with their mother during 2003,
petitioner paid $300 to her for support of the children.
Petitioner provided no other support to the children, nor did
their mother provide any support to petitioner during the time
the children were with him.
For the year at issue, 2003, petitioner and the children’s
mother both claimed the children as dependents on their
respective Federal income tax returns. Petitioner filed his 2003
return as a head-of-household under section 2(b)(1) and claimed
the dependency exemption deductions for the three children, the
earned income credit under section 32(a), and the child tax
credit and the additional child tax credit under section 24. In
the notice of deficiency, respondent disallowed the dependency
exemption deductions, petitioner’s head-of-household filing
status, the earned income credit, the child care credit, and the
additional child care credit.
Deductions are a matter of legislative grace, and taxpayers
must maintain adequate records to substantiate the amounts of any
deductions or credits claimed. Sec. 6001; INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); sec. 1.6001-1(a), Income
Tax Regs. Taxpayers generally bear the burden of proving that
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the Commissioner’s determination is incorrect. Rule 142(a);
Welch v. Helvering, 290 U.S. 111 (1933).2
The first issue is whether petitioner is entitled to the
dependency exemption deductions for the three children for the
year at issue.
Section 151(c) allows taxpayers to deduct an annual
exemption amount for each dependent, as defined in section 152.
Under section 152(a), the term “dependent” means certain
individuals over half of whose support was received from the
taxpayer during the taxable year in which such individuals are
claimed as dependents. As relevant here, the term includes a son
or daughter of the taxpayer. Sec. 152(a)(1).
The basis upon which petitioner claims entitlement to the
dependency exemption deductions is that the children lived with
him for 7 months during the year, during which he was their sole
source of support, and, for the 5 months in which the children
lived with their mother, he paid the mother $300 to support the
children. Thus, petitioner claims that, from a practical
standpoint, since the children were with him a greater portion of
the year at issue, he, logically, provided more than half of the
children’s support that year.
2
Under some circumstances, the burden of proof shifts to the
Commissioner under sec. 7491. That burden does not shift to
respondent because petitioner failed to maintain records and
comply with the requirements of substantiation as required by
sec. 7491(a)(2).
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Respondent has not challenged petitioner’s contention that
the children lived with him for 7 months during the year at
issue. Section 152(e) provides a special support test in the
case of divorced parents or parents who have never been married.
See King v. Commissioner, 121 T.C. 245, 250 (2003). Under
section 152(e), if both parents together provide over half of the
support of a child, the parent having custody of the child for
the greater portion of the taxable year is entitled to the
dependency exemption for such child. The Court is satisfied that
petitioner and the children’s mother provided over half the
support for their children during the year at issue. Because the
children resided with petitioner for 7 months, he had custody of
them for the greater portion of the year and, consequently, he
satisfies the requirements of section 152(e). On the facts
presented at trial, the Court holds that petitioner is entitled
to the dependency exemption deductions for his three children.
The second issue is whether petitioner is entitled to head-
of-household filing status for the year at issue.
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. Petitioner satisfies
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that requisite; consequently, he qualifies for head-of-household
filing status for the year at issue. See sec. 2(b)(1)(A)(i).
The third issue is petitioner’s claim to the earned income
credit of $2,815 under section 32.
Section 32(a)(1) allows an eligible individual an earned
income credit against the individual’s income tax liability.
Section 32(a)(2) limits the credit allowed, and section 32(b)
prescribes different percentages and amounts used to calculate
the credit based on whether the eligible individual has no
qualifying children, one qualifying child, or two or more
qualifying children.
To be eligible to claim an earned income credit with respect
to a qualifying child, a taxpayer must establish, inter alia,
that the child bears a relationship to the taxpayer prescribed by
section 32(c)(3)(B), that the child meets the age requirements of
section 32(c)(3)(C), and that the child shares the same principal
place of abode as the taxpayer for more than one-half of the
taxable year as prescribed by section 32(c)(3)(A)(ii).
In the pretrial memorandum respondent filed at the trial of
this case, respondent argued:
Generally, I.R.C. section 32(c)(3) defines four tests for
“qualifying child” which pertain to 1) relationship, 2) age,
3) identification (taxpayer identification number) of the
child and 4) and abode requirement. On this issue
Petitioner does not satisfy the abode requirement with
respect to the residency of the claimed dependents during
2003. In addition it has already been shown he failed to
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demonstrate that he provided more than 50% of the overall
household expenses in order to be entitled to the dependency
exemption for any of his dependents. Since he did not
fulfill the abode requirement relative to the dependency
exemptions and since he is not entitled to claim a
dependency exemption for any of the minor children, he is
not entitled to the earned income credit.
Respondent’s statement with respect to the abode requirement
is in error because petitioner’s unchallenged testimony at trial
was that the children lived with him for 7 months during the year
at issue. Under section 32(c)(1)(A)(ii), over 6 months of
sharing a place of abode with the taxpayer is necessary to
qualify for the earned income credit. Moreover, there is no
support requirement under section 32, nor is it required that the
taxpayer be entitled to the dependency exemption deductions for
the children. In response to respondent’s argument, quoted
above, that petitioner failed to establish that he provided more
than 50 percent of the overall household expenses relative to the
claimed dependency exemption deductions, the flush language of
section 2(b)(1) provides that an individual shall be considered
as maintaining a household if over half the cost of maintaining
the household during the taxable year is furnished by that
individual, a requirement which petitioner satisfied.
Petitioner, therefore, is sustained on this issue.
The next issue is petitioner’s claim to the child tax credit
and the additional child tax credit under section 24. In the
notice of deficiency, respondent disallowed both credits.
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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 this case, a
qualifying child means an individual with respect to whom the
taxpayer is allowed a deduction under section 151. Sec.
24(c)(1)(A). Since petitioner is entitled to the dependency
exemption deductions under section 151, it follows he is entitled
to the 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. 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. Sec. 26(a).
If the child tax credit exceeds the taxpayer’s Federal income tax
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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 entitled to the additional child tax credit
because he qualified for a child tax credit. Accordingly,
petitioner’s claim to this credit is sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for petitioner.