T.C. Summary Opinion 2008-31
UNITED STATES TAX COURT
JOSEPH LEE MARSHALL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19428-06S. Filed March 26, 2008.
Joseph Lee Marshall, pro se.
Richard F. Stein, 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. Pursuant to section
7463(b), the decision to be entered is not reviewable by any
other court, and this opinion shall not be treated as precedent
for any other case. Unless otherwise indicated, subsequent
section references are to the Internal Revenue Code in effect for
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the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
Respondent determined a deficiency of $6,063 in petitioner’s
2005 Federal income tax. The issues for decision are: (1)
Whether petitioner is entitled to dependency exemption deductions
for two children; (2) whether petitioner is entitled to a child
tax credit; (3) whether petitioner qualifies for head of
household filing status; and (4) whether petitioner is entitled
to an earned income 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 Baltimore, Maryland.
From November 2004 through July 2005, petitioner lived in a
row house in Baltimore, Maryland, with his mother Ernestine
Marshall (Ms. Marshall), his girlfriend Eunice Briscoe (Ms.
Briscoe), and Ms. Briscoe’s two minor children, FA and AA.1
Petitioner is not related to FA or AA by blood or marriage and
had not adopted FA or AA. FA and AA’s biological father did not
provide any support for the children. The row house was owned by
Ms. Marshall. Neither petitioner nor Ms. Briscoe paid rent while
they lived in Ms. Marshall’s home; however, petitioner and Ms.
1
The Court uses initials when referring to minor children.
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Briscoe both contributed funds for food and utility costs.
Petitioner paid Ms. Marshall approximately $250 to $300 a month
for “room and board” while residing in her home.
In August 2005, petitioner, Ms. Briscoe, FA, and AA moved
into an apartment in Baltimore, Maryland. Petitioner lived in
the apartment with Ms. Briscoe, FA, and AA through the end of
2005. The rent for the apartment was $675 a month. Initially,
petitioner and Ms. Briscoe each paid approximately one-half the
rent. However, from October through December 2005, petitioner
paid all of the rent. Additionally, petitioner paid for
utilities amounting to approximately $110 to $170 per month.
In 2005, petitioner received $21,040 in wages from his work
as a fork lift operator. Petitioner’s mother was retired and
receiving Social Security benefits. Ms. Briscoe was employed at
Popeye’s Chicken and Biscuits Restaurant until June 2005,2 when
she began working at Sinai Hospital. Ms. Briscoe earned $600-
$700 biweekly while employed at Sinai Hospital. Ms. Briscoe
ended her employment at the hospital in September 2005.3
Petitioner timely filed his 2005 Federal income tax return
as a head of household. He also claimed dependency exemption
2
The record does not disclose how much Ms. Briscoe earned
while employed at Popeye’s.
3
According to petitioner, Ms. Briscoe also received State
assistance; however, it is not known what type of assistance she
received nor the amount thereof.
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deductions for the two children, child tax credits, and an earned
income credit with respect to FA and AA. Petitioner listed the
two children as his son and daughter on his 2005 Federal income
tax return.
Respondent issued petitioner a notice of deficiency in July
2006, denying the claimed deductions and credits and changing
petitioner’s filing status to single. Petitioner filed a timely
petition for redetermination.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct, and the taxpayer bears
the burden of showing that the determination is in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Deductions
and credits are a matter of legislative grace, and the taxpayer
bears the burden of proving entitlement to any deduction or
credit claimed on a return. INDOPCO, Inc. v. Commissioner, 503
U.S. 79, 84 (1992); Wilson v. Commissioner, T.C. Memo. 2001-139.
Pursuant to section 7491(a), the burden of proof as to
factual matters shifts to the Commissioner under certain
circumstances. Petitioner has neither alleged that section
7491(a) applies nor established his compliance with the
requirements of section 7491(a)(2)(A) and (B) to substantiate
items, maintain records, and cooperate fully with respondent’s
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reasonable requests. Petitioner therefore bears the burden of
proof.
A. Dependency Exemption Deductions
A taxpayer may be entitled to a dependency exemption
deduction for each of his or her dependents. Sec. 151(a), (c).
However, a taxpayer is entitled to claim a dependency exemption
deduction only if the claimed dependent is a “qualifying child”
or a “qualifying relative” under section 152(c) or (d). Sec.
152(a).
Under section 152(c)(1)(A), a qualifying child is a child
who bears a relationship to the taxpayer described in section
152(c)(2). That relationship, for purposes of this case, exists
if the claimed dependent is either a child of the taxpayer, a
brother, sister, stepbrother, stepsister, or a descendant of any
such relative. Section 152(f)(1) expands the definition of
“child” to include an individual who was legally adopted by or is
an eligible foster child of the taxpayer. Sec. 152(f)(1)(A)(ii),
(B). Petitioner has not adopted either child, nor is he related
to FA or AA by blood or marriage. Neither FA or AA was placed
with petitioner by an authorized placement agency or a court
order. Sec. 152(f)(1)(B) and (C). Thus, petitioner has failed
to establish that either FA or AA is a qualifying child as to
petitioner.
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Section 152(d)(1) defines a qualifying relative as an
individual: (A) Who bears a relationship to the taxpayer as
described in section 152(d)(2); (B) whose gross income for the
year is less than the exemption amount defined in section 151(d);
(C) who receives over half of his or her support from the
taxpayer for the taxable year at issue; and (D) who is not a
qualifying child of the taxpayer or of any other taxpayer for the
taxable year. Section 152(d)(2) lists eight types of qualifying
relationships. The first seven involve situations where an
individual is related to the taxpayer by blood or marriage. Sec.
152(d)(2)(A) through (G). As stated above, a legally adopted
individual is included in the definition of “child” for purposes
of this section. Sec. 152(f)(1)(B). As previously discussed, FA
and AA were not related to petitioner by blood or marriage, nor
were they adopted by petitioner. Thus, section 152(d)(2)(A)
through (G) does not apply.
Section 152(d)(2)(H) provides the eighth qualifying
relationship. An individual may be considered a relative under
section 152(d)(2) even though not related to the taxpayer in the
traditional sense if that person: (1) Is not the taxpayer’s
spouse; (2) has the same principal place of abode as the
taxpayer; and (3) is a member of the taxpayer’s household during
the taxable year. Sec. 152(d)(2)(H). In order for an individual
to be considered a member of a taxpayer’s household, the taxpayer
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must maintain the household, and both the taxpayer and the
individual must occupy the household for the taxable year. Sec.
1.152-1(b), Income Tax Regs. A taxpayer maintains a household
when he pays more than half of the expenses for the household.
Rev. Rul. 64-41, 1964-1 C.B. 84. FA and AA had the same
principal place of abode as petitioner, who was unmarried.
Further, petitioner, FA, and AA occupied the household for 2005.
The record does not provide us with sufficient evidence of
the total available sources of support for the children or that
petitioner paid more than half of the expenses for the household.
Thus, FA and AA are not considered related to petitioner for
purposes of section 152(d)(1)(A).
Even if we concluded that FA and AA were related to
petitioner within the meaning of section 152(d)(2)(H), section
152(d)(1)(C) requires that petitioner also provide over half of
the total support for the children for the taxable year. In
order to meet this burden of support, petitioner must establish,
by competent evidence, the total amount of support furnished for
the taxable year at issue. See Blanco v. Commissioner, 56 T.C.
512, 514-515 (1971); Cotton v. Commissioner, T.C. Memo. 2000-333.
Support includes “food, shelter, clothing, medical and dental
care, education, and the like.” Sec. 1.152-1(a)(2)(i), Income
Tax Regs.
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As previously indicated, petitioner offered little evidence
as to the total sources of support or his share of support for FA
and AA. Both petitioner and Ms. Briscoe helped pay for food and
utilities when they lived with petitioner’s mother, but neither
paid rent. While petitioner may have paid for room and board, we
have little information as to the total expenditures to support
the children during the period January to August 2005. After
petitioner moved with Ms. Briscoe and the children in August of
2005, petitioner paid one-half the rent for a period of time. At
some point during or after September 2005, petitioner paid the
entire rent. There is still insufficient evidence in this record
to establish the total cost of the children’s support during this
period, and thus petitioner failed to establish that he provided
more than half of the children’s support for 2005. Petitioner
has failed to prove that either FA or AA is a qualifying
relative.
Neither FA nor AA may be considered a qualifying child or a
qualifying relative; therefore, neither child may be considered
petitioner’s dependent. Petitioner is not entitled to a
dependency exemption deduction for FA or AA. Respondent’s
determination on this issue is sustained.
B. Child Tax Credits
Section 24(a) provides for a “credit against the tax * * *
for the taxable year with respect to each qualifying child of the
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taxpayer”. Section 24(c)(1) provides that, for purposes of
section 24, “qualifying child” means an individual under age 17
who is a qualifying child of the taxpayer as defined in section
152(c). As discussed above, petitioner has not shown that either
FA or AA is a qualifying child of petitioner under section
152(c). Therefore, he has not established that either child is a
qualifying child for purposes of section 24.
Petitioner, thus, is not entitled to a child tax credit for
FA or AA. Respondent’s determination on this issue is sustained.
C. Head of Household Filing Status
Section 1(b) grants a special lower income tax rate to a
taxpayer who files as head of household. As relevant to this
case, to qualify as a head of household the taxpayer must
maintain as his or her home a household that is the principal
place of abode for more than half of the taxable year of an
individual who qualifies as the taxpayer’s dependent under
section 151. Sec. 2(b)(1)(A)(ii); Toney v. Commissioner, T.C.
Memo. 2004-165. Section 151(c) allows an exemption for each
individual who is a dependent of the taxpayer, as defined in
section 152(a), for the taxable year in question. Further,
section 152(a)(1) and (2) defines a dependent as a qualifying
child or a qualifying relative.
Neither FA nor AA was a qualifying child or a qualifying
relative of petitioner, as discussed supra. Therefore, the
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children are not dependents for purposes of section 151(c).
Because petitioner had no dependents as required under section
151, he is not entitled to head of household filing status for
2005. Respondent’s determination on this issue is sustained.
D. 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
pertinent part, defines an “eligible individual” as “any
individual who has a qualifying child for the taxable year”. A
qualifying child is a child of the taxpayer as defined in section
152(c). Sec. 32(c)(3). As stated above, neither FA nor AA was
petitioner’s qualifying child for 2005. Thus, petitioner is not
entitled to an earned income credit. Respondent’s determination
on this issue is sustained.
To reflect the foregoing,
Decision will be entered
for respondent.