T.C. Summary Opinion 2008-122
UNITED STATES TAX COURT
TARSHA LATRICE MCCLAIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14299-06S. Filed September 16, 2008.
Tarsha Latrice McClain, pro se.
Lynette Mayfield, for respondent.
WELLS, Judge: This case was heard pursuant to the
provisions of section 74631 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.
1
All subsequent section references are to the Internal
Revenue Code in effect for the years in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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Respondent determined deficiencies in Federal income taxes
of $4,219 and $5,376 for petitioner’s 2004 and 2005 taxable
years, respectively. The issues we must decide are: (1) Whether
petitioner is entitled to two dependency exemption deductions for
two unrelated minor children for taxable years 2004 and 2005;
(2) whether petitioner is entitled to head of household filing
status for taxable years 2004 and 2005; (3) whether petitioner is
entitled to the earned income credit as an individual with
two unrelated children for taxable years 2004 and 2005; and
(4) whether petitioner is entitled to the additional child tax
credit for two unrelated minor children for taxable year 2005.
Background
At the time of filing the petition, petitioner resided in
Arizona.
For taxable year 2004 petitioner timely filed a Form 1040,
U.S. Individual Income Tax Return. Respondent issued a notice of
deficiency with regard to petitioner’s 2004 taxable year in which
respondent disallowed two dependency exemption deductions, head
of household filing status, and an earned income credit on the
basis of two qualifying children.
For taxable year 2005 petitioner timely filed a Form 1040.
Respondent issued a notice of deficiency with regard to
petitioner’s 2005 taxable year in which respondent disallowed two
dependency exemption deductions, head of household filing status,
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an earned income credit on the basis of two qualifying children,
and an additional child tax credit on the basis of two qualifying
children.
BJ,2 born March 20, 1995, and CJ, born March 10, 1996, are
minor children of Penny Freeman (Ms. Freeman). Petitioner is not
related to BJ or CJ. BJ and CJ were not at any time placed with
petitioner by a court or authorized placement agency. During the
years in issue, BJ and CJ lived with Ms. Freeman at all times.
At the beginning of 2004 petitioner lived with Ms. Freeman and
Ms. Freeman’s children, BJ and CJ, in Memphis, Tennessee. During
part of 2004 petitioner provided health insurance for, inter
alia, BJ and CJ, through her employer.
On August 9, 2004, BJ and CJ withdrew from Memphis City
Schools in order to move to Arizona with Ms. Freeman. Petitioner
did not move with Ms. Freeman and her children but instead
remained in Memphis.
On December 7, 2004, petitioner moved to a residential
hotel in Tempe, Arizona, with Ms. Freeman and her children. On
July 30, 2005, petitioner and Ms. Freeman jointly rented a home
in Phoenix, Arizona, for $966.51 per month, including trash
removal.
2
The Court refers to minor children by their initials. Rule
27(a)(3).
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Discussion
Dependency Exemption Deductions
In order to be entitled to dependency exemption deductions,
petitioner must prove that she meets the provisions of sections
151 and 152.3 Because sections 151 and 152 were amended,4 the
law is different for 2004 and 2005. We discuss each taxable year
in turn.
Taxable Year 2004
For 2004 section 151(c)(1) provides that an exemption is
allowed for each person who is a dependent of a taxpayer if the
following requirements are met: (a) The individual for whom an
exemption is claimed is a U.S. citizen who is a dependent (as
defined in section 152), which includes a son, daughter, stepson,
stepdaughter, sibling, parent or other ancestor, stepparent,
niece, nephew, aunt, uncle, certain relatives-in-law, or an
individual other than the taxpayer’s spouse, who, for the taxable
year of the taxpayer, has as his principal place of abode the
home of the taxpayer and is a member of the taxpayer’s household;
3
Petitioner has not raised sec. 7491 and therefore it does
not apply. Consequently, petitioner bears the burden of proof.
See Rule 142(a).
4
The Working Families Tax Relief Act of 2004, Pub. L. 108-
311, sec. 206, 118 Stat. 1176, amended sec. 151, effective for
tax years beginning after Dec. 31, 2004. The Working Families
Tax Relief Act of 2004, sec. 201, 118 Stat. 1169, amended sec.
152, effective for tax years beginning after Dec. 31, 2004.
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(b) over one-half of the individual’s support for the taxable
year is received from the taxpayer; and (c) the individual’s
gross income is less than the exemption amount or the individual
is the taxpayer’s child who is younger than age 19 or is a
student younger than age 24. Secs. 151(c), 152(a).
Section 152(a)(9) requires that, to be entitled to a
dependency exemption deduction for a person not related to the
taxpayer, the taxpayer must show that the individual for whom the
dependency exemption deduction is sought has lived with them as
part of their household for the entire taxable year.
Petitioner has failed to show that BJ and CJ resided with
her as part of her household for the entire year 2004. The
Memphis City School records show that on August 9, 2004, BJ and
CJ withdrew from school in order to move. They moved to Arizona
with their mother, while petitioner remained in Memphis.
Petitioner joined Ms. Freeman and the children in Arizona during
December 2004. Accordingly, the two children in issue did not
live with petitioner as part of her household for the entire
year 2004.
Petitioner must also show that she provided over one-half
of the support for the children during 2004. See sec. 152(a).
To be entitled to a deduction for a dependency exemption,
a taxpayer must establish the total support costs expended on
behalf of the claimed dependent from all sources for that year,
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and must demonstrate that they provided over one-half of that
amount. Daya v. Commissioner, T.C. Memo. 2000-360; sec. 1.152-
1(a)(2)(i), Income Tax Regs.
Petitioner has failed to establish and take into account the
full amount of income from all sources into her household for
2004 and the expenditure from those sources, and thus is unable
to establish whether or not any amounts of support provided by
her during 2004 constituted more than one-half of the support for
the claimed dependents. Petitioner has not accounted for the
earnings of Ms. Freeman, if any, and the amount of any government
benefits that Ms. Freeman may have received.
On the basis of the meager record in the instant case,
petitioner has failed to meet her burden of proof with regard to
the dependency exemptions for 2004.
Taxable Year 2005
For 2005, section 151(c) provides for dependency exemptions
for dependents as defined in section 152. Section 152(a) defines
a dependent as either a “qualifying child” or a “qualifying
relative.” A qualifying child is one who does not provide over
one-half of his support. Sec. 152(c)(1)(D).
Section 152(c) establishes four tests for a qualifying
child: (1) The relationship test; (2) the principal place of
abode test; (3) the age test; and (4) the support test. The age
test is not an issue. The relationship test set forth in section
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152(c)(2) requires that a qualifying child be a child of the
taxpayer, a brother or sister of the taxpayer, a stepbrother or
stepsister of the taxpayer, or a descendant of any of these.
Petitioner did not offer any evidence that the children in
issue are related to her. Indeed, the parties stipulated that BJ
and CJ are not related to petitioner. BJ and CJ are the children
of Ms. Freeman, with whom petitioner lived for part of 2004 and
all of 2005.
Additionally, section 152(d)(1)(D) disallows a deduction for
a dependency exemption with regard to an individual who may be a
qualifying child of another taxpayer for the taxable year.
Petitioner has not established that BJ and CJ were not the
qualifying children of Ms. Freeman during all of 2005.
Accordingly, they cannot be individuals for whom a dependency
exemption is allowable to petitioner as an unrelated taxpayer.
On the basis of the record, we hold petitioner is not
entitled to the two dependency exemption deductions she claimed
for taxable year 2005.
Head of Household Filing Status
Taxable Year 2004
As relevant here, to be entitled to file as a head of
household a taxpayer must be unmarried and not a surviving spouse
at the close of the tax year and must maintain as his home a
household which constitutes for more than one-half of the year
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the principal place of abode, as a member of his household, of a
person for whom the taxpayer is entitled to a deduction for a
dependency exemption pursuant to section 151. Sec.
2(b)(1)(A)(ii). A taxpayer is considered as maintaining a
household only if over half of the cost of maintaining the
household during the taxable year is furnished by the taxpayer.
Sec. 2(b); Blanco v. Commissioner, 56 T.C. 512, 514-515 (1971).
Petitioner has failed to offer evidence that BJ and CJ were
members of her household for the entire taxable year 2004.
Petitioner has not shown that she is entitled to the two
dependency exemption deductions for 2004. Consequently,
petitioner is not entitled to head of household status for
taxable year 2004.
Taxable Year 2005
For 2005 the definition of “head of household” was amended
to require that, to be entitled to file as head of household, an
individual must maintain a home which constitutes for more than
one-half of the taxable year the principal place of abode of an
unmarried qualifying child, as defined in section 152(c), or the
principal place of abode for the entire year of any other person
who is a dependent of the taxpayer for whom the taxpayer is
entitled to a deduction under section 151. Sec. 2(b)(1)(A).
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The evidence shows that BJ and CJ are not related to
petitioner. Accordingly, they fail the relationship test. See
sec. 152(c). Furthermore, petitioner cannot meet the
requirements of section 152(d)(1)(D), which disallows a
dependency exemption unless the taxpayer establishes that the
proposed dependent is not the qualifying child of another
taxpayer. As discussed above, BJ and CJ may be qualifying
children of their mother, Ms. Freeman, with whom they lived for
the entire year 2005. Moreover, petitioner failed to prove that
she provided more than one-half of the cost of maintaining a
household for BJ and CJ for taxable year 2005 as required by
section 2(b)(1). Petitioner is therefore not entitled to file
as a head of household for 2005.
Earned Income Credit
On each of her 2004 and 2005 returns petitioner claimed an
earned income credit based on BJ and CJ as qualifying children.
Section 32(c)(1)(A) provides that, for purposes of qualifying for
the earned income credit, an “eligible individual” is an
individual who has a qualifying child for the taxable year.5 A
“qualifying child” is defined as an individual’s child,
stepchild, sibling, step-sibling, a descendant of any of these,
or an eligible foster child (placed with the individual by an
5
Respondent concedes that without a qualifying child,
petitioner is entitled to an earned income credit of $112 for
taxable year 2004 only pursuant to sec. 32(c)(1)(A)(ii).
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authorized agency) whom the individual cares for as the
individual’s own child; who is under the age of 19; and who has
the same principal place of abode as the individual for more than
one-half of the taxable year. Sec. 32(c)(3).
Petitioner is not related to BJ or CJ and has produced no
evidence that they were placed with her by an authorized
placement agency. BJ and CJ therefore are not qualifying
children for purposes of the earned income credit for the taxable
years in issue.
Additional Child Tax Credit
Petitioner claimed an additional child tax credit on the
basis of BJ and CJ as qualifying children for taxable year 2005.6
Subject to limitations on the basis of adjusted gross income, a
taxpayer is allowed for the year a child tax credit with regard
to each qualifying child of the taxpayer. Sec. 24(a). A
portion of the child tax credit may be refundable as additional
child tax credit if the taxpayer has an unused child tax credit.
Sec. 24(d).
For taxable year 2005 a qualifying child is defined as one
that meets the requirements of a qualifying child for purposes of
the dependency exemption pursuant to section 152(c) who has not
attained age 17. Sec. 24(c). BJ and CJ do not meet the
6
No additional child tax credit was disallowed by respondent
for taxable year 2004.
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relationship test of section 24(c)(1) and section 152(c)(1) and
(2). Petitioner has not demonstrated that she is entitled to
dependency exemption deductions for BJ and CJ. Accordingly, we
hold that petitioner is therefore not entitled to an additional
child tax credit for taxable year 2005 on the basis of BJ and CJ
as qualifying children.
We have considered all of the parties’ arguments, and, to
the extent they are not discussed in this opinion, we conclude
that they are without merit, irrelevant, or unnecessary to reach.
To reflect the foregoing,
Decision will be entered
under Rule 155.