T.C. Summary Opinion 2008-135
UNITED STATES TAX COURT
REGINALD C. SCOTT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 369-06S. Filed October 28, 2008.
Reginald C. Scott, pro se.
R. Scott Shieldes, for respondent.
GERBER, Judge: This case was heard pursuant to the
provisions of section 74631 of the Internal Revenue Code in
effect when the petition was filed. Pursuant to section 7463(b),
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 2003, the taxable year in
issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
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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.
Respondent determined a $5,347 deficiency in petitioner’s
2003 Federal income tax due solely to the disallowance of two
dependency exemption deductions and related child tax credits,
and the adjustment of petitioner’s filing status from head of
household to single.
Background
Petitioner resided in Houston, Texas at the time his
petition was filed in this case. Petitioner filed his 2003 Form
1040, U.S. Individual Income Tax Return, as a head of household
and claimed dependency exemption deductions for two daughters.
Petitioner also claimed a child tax credit with respect to his
dependents.
Petitioner’s daughters were born on November 13, 1978, and
February 27, 1992, respectively. During 2003 petitioner’s
daughters were 24 and 11 years of age, and petitioner’s 24-year-
old daughter was a full-time college student. Petitioner was
married to their mother, Marilyn Scott, until their divorce on
June 1, 1994. Marilyn Scott was awarded custody of petitioner’s
daughters. The divorce decree also outlines times when
petitioner would have visitation with his children, including
holidays, birthdays, and weekends. Petitioner was ordered to pay
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child support of $700 per month, which was for three children
including his two daughters. Child support was payable until the
youngest child reached 18 years of age and through the end of the
high school year of the youngest child’s 18th birthday.
In addition to the $700 monthly child support payment,
petitioner and his former wife each were required to pay one-half
of all health care not paid for by insurance, including medical,
dental, drugs, etc. During 2003, 26 payments were withheld from
petitioner’s wages in the amounts of $323.08 or a total of
$8,400.08 for the year. The divorce decree also has a section
labeled “Excessive Tax Withholding” which includes the following
order: “For the purposes of federal income tax withholding,
Reginal Charles Scott is ORDERED AND DECREED to claim no fewer
than the actual number of his dependents on Form W-4.”
Petitioner paid additional amounts, including $1,200 to
$1,600 annually for medical insurance coverage. Petitioner,
however, was not aware of and cannot show the total amount that
was expended for the support of his daughters.
Discussion
Petitioner claimed dependency exemption deductions for two
children for which he was not the custodial parent during 2003.
In addition to claiming them as dependents, petitioner filed his
2003 income tax return using head of household status, and he
claimed a child tax credit based on their status as dependents.
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In general, the Commissioner’s determinations set forth in a
notice of deficiency are presumed correct, and the taxpayer bears
the burden of showing that the determinations are 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. See 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
reasonable requests. Petitioner therefore bears the burden of
proof.
Petitioner argues that the “Excessive Tax Withholding”
clause in his divorce decree entitled him to claim the dependency
exemption deductions for his children. Respondent disagreed and,
at trial, explained that the withholding clause was intended to
ensure that petitioner had an adequate after-withholding tax net
pay to satisfy the court-ordered support payments that were being
automatically withheld by his employer. The disputed clause
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states: “For the purposes of federal income tax withholding,
Reginald Charles Scott is ORDERED AND DECREED to claim no fewer
than the actual number of his dependents on Form W-4.” Although
this Court is not able to agree with respondent’s interpretation
of that clause, we are certain that it was not intended to give
petitioner the sole right to claim the Federal tax dependency
exemption deductions for the children. Accordingly, we proceed
to decide whether petitioner has shown that he is entitled to
claim the dependency exemption deductions under the statutory
requirements.
The issues we consider turn on whether either of
petitioner’s daughters was a dependent as defined in section 152
for 2003. A taxpayer may be entitled to claim as a deduction an
exemption amount for each of his or her dependents. Sec. 151(c).
An individual must meet the following five tests in order to
qualify as a dependent of the taxpayer: (1) Support test; (2)
relationship or household test; (3) citizenship or residency
test; (4) gross income test; and (5) joint return test. Secs.
151 and 152. If the individual fails any of these tests, he or
she does not qualify as a dependent.
For a claimed dependent to satisfy the support test a
taxpayer generally must provide more than one-half of the claimed
dependent’s support for the calendar year in which the taxable
year of the taxpayer begins. Sec. 152(a). The taxpayer must
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initially demonstrate, by competent evidence, the total amount of
the support furnished by all sources for the taxable year at
issue. Blanco v. Commissioner, 56 T.C. 512, 514 (1971); Cotton
v. Commissioner, T.C. Memo. 2000-333. If the total amount of
support is not established, then it is generally not possible to
conclude that the taxpayer provided more than one-half of the
support to the claimed dependent. Blanco v. Commissioner, supra
at 514-515; Cotton v. Commissioner, supra. Support includes
“food, shelter, clothing, medical and dental care, education, and
the like.” Sec. 1.152-1(a)(2)(i), Income Tax Regs.
Petitioner testified and provided evidence that he
contributed money toward his daughters’ expenses. Sadly for
petitioner, however, he was unable to establish the total amount
of support provided to each child for 2003, and, accordingly,
petitioner has failed to show that he provided more than one-half
of each daughter’s support. See Blanco v. Commissioner, supra at
514-515.
Petitioner also contended that he made an agreement with the
attorneys who represented the parties in his divorce proceeding
that petitioner would be entitled to claim the daughters as
dependents on his separate tax returns. Petitioner has not
provided any evidence of such an agreement other than his vague
testimony on the subject. Petitioner appears to be arguing that
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there was a multiple support agreement with respect to the
children.
Section 152(c) provides for multiple support agreements and
requires that no one person contribute over one-half of an
individual’s support and that over one-half of the support be
received from persons each of whom, but for the fact that he did
not contribute over one-half of such support, would have been
entitled to claim the individual as a dependent for a taxable
year beginning in that calendar year. In addition, petitioner
would have to prove that he contributed over 10 percent of the
total support and each contributor of over 10 percent consented
in writing to a multiple support agreement.
Because petitioner is unable to demonstrate that no one
person contributed over half of the support for 2003, he is not
entitled to claim the dependency exemption deduction under that
approach. We therefore hold that petitioner is not entitled to
the claimed deductions, as determined by respondent.
Section 24(a) provides for a “credit against the tax * * *
for the taxable year with respect to each qualifying child of the
taxpayer”. The term “qualifying child” means any individual if
three requirements are met, one of which is that the taxpayer be
allowed a deduction under section 151 with respect to the
individual for the taxable year. Sec. 24(c)(1). Because we have
concluded that petitioner is not entitled to dependency
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exemption deductions for his daughters, they are not qualifying
children. We therefore hold that petitioner is not entitled to
child tax credits.
Section 1(b) imposes a special income tax rate on a taxpayer
filing as a head of household. To qualify as a head of household
the taxpayer must, inter alia, maintain as his or her home a
household that is the principal place of abode for more than one-
half of the year of an unmarried child of the taxpayer. Sec.
2(b)(1)(A). Because petitioner’s daughters did not live with him
for more than one-half of the year, we hold that he is not
entitled to head-of-household filing status.
To reflect the foregoing,
Decision will be entered for
respondent.