T.C. Summary Opinion 2009-43
UNITED STATES TAX COURT
CHRISTOPHER CHARLES POWERS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24625-07S. Filed March 26, 2009.
Christopher Charles Powers, pro se.
Derek P. Richman, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code
(Code) in effect when 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 Code in effect for the
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years in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
Respondent determined deficiencies of $3,875 and $3,543 in
petitioner’s 2004 and 2005 Federal income taxes, respectively.
The issues for decision are whether petitioner is entitled to:
(1) his claimed deduction for unreimbursed employee expenses for
2004; (2) his claimed dependency exemption deduction for 2005;
(3) his claimed child tax credit for 2005; and (4) head of
household filing status for 2005.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received into evidence
are incorporated herein by reference. When the petition was
filed, petitioner resided in Florida.
During 2004 petitioner worked for the National Association
of Letter Carriers as a union representative. He traveled from
Key West to West Palm Beach, Florida, handling mediation,
arbitration, and litigation for the union. His 2004 deduction
for unreimbursed employee expenses related to hotel charges and
transportation expenses that he incurred while using his personal
vehicle for union purposes.
During 2003 and 2004 petitioner and his former spouse were
in the process of obtaining a divorce. They entered into a
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settlement agreement (support order)1 that provided that
petitioner was entitled to “child income tax benefits during the
odd numbered years beginning with 2005” if he was current with
his child support obligations.
Petitioner’s 2005 Form 1040, U.S. Individual Income Tax
Return, was prepared by a certified public accountant (C.P.A.).
For 2005 he claimed a dependency exemption deduction and a child
tax credit for his child, and he filed as a head of household.
He did not attach Form 8332, Release of Claim to Exemption for
Child of Divorced or Separated Parents, to his 2005 Form 1040.
I. Burden of Proof
The Commissioner’s determinations in a notice of deficiency
are presumed correct, and the taxpayer bears the burden to prove
that the determinations are in error. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). But the burden of proof on
factual issues that affect the taxpayer’s tax liability may be
shifted to the Commissioner where the taxpayer introduces
credible evidence with respect to the issue and the taxpayer has
satisfied certain conditions. Sec. 7491(a)(1). Petitioner has
not alleged that section 7491(a) applies, and he has neither
complied with the substantiation requirements nor maintained all
1
In the alternative, petitioner referred to the settlement
agreement as a child support enforcement order, a court order, or
a divorce order.
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required records. See sec. 7491(a)(2)(A) and (B). Accordingly,
the burden of proof remains on him.
II. Unreimbursed Employee Expenses
Section 162(a) authorizes a deduction for all the ordinary
and necessary expenses paid or incurred during the taxable year
in carrying on any trade or business. But as a general rule,
deductions are allowed only to the extent that they are
substantiated. Secs. 274(d) (no deductions are allowed for
gifts, listed property,2 or traveling, entertainment, amusement,
or recreation unless substantiated),3 6001 (taxpayers must keep
records sufficient to establish the amounts of the items required
to be shown on their Federal income tax returns).
Petitioner admitted that he did not “know where the C.P.A.
came up with” $16,000 in unreimbursed employee expenses, but “I
know it was a couple of thousand.” He also testified that he did
2
The term “listed property” is defined to include passenger
automobiles. Sec. 280F(d)(4)(A)(i).
3
Specifically, sec. 274(d) requires taxpayers to
substantiate by adequate records or sufficient evidence to
corroborate the taxpayers’ own testimony: (1) The amount of the
expenditure or use; (2) the time of the expenditure or use; (3)
the place of the expenditure or use; (3) the business purpose of
the expenditure or use; and (4) the business relationship to the
taxpayer of the persons entertained or receiving the gift. See
also sec. 1.274-5T(a) and (b), Temporary Income Tax Regs., 50
Fed. Reg. 46014 (Nov. 6, 1985).
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not have any records to substantiate his deductions because they
were “lost during the divorce.”4
Because petitioner has provided no evidence that meets the
substantiation requirements of sections 274(d) and 6001 and the
regulations thereunder, he is not entitled to his claimed
deduction for unreimbursed employee expenses. Respondent’s
determination is sustained.
III. Dependency Exemption Deduction
Generally, taxpayers may claim dependency exemption
deductions for their dependents. Sec. 151(c). The term
“dependent” includes a “qualifying child”. Sec. 152(a). A
qualifying child is defined as an individual who: (1) Bears a
certain relationship to the taxpayer, such as the taxpayer’s
child; (2) has the same principal place of abode as the taxpayer
for more than one-half of the taxable year; (3) meets certain age
requirements; and (4) has not provided over one-half of the
individual’s own support for the taxable year. Sec. 152(c).
Section 152(e)(1), in pertinent part, provides a general
rule that limits the dependency exemption deduction as follows:
4
Petitioner did not attempt to reconstruct his expenditures.
See Boyd v. Commissioner, 122 T.C. 305, 319-322 (2004); Sanderlin
v. Commissioner, T.C. Memo. 2008-209; sec. 1.274-5T(c)(5),
Temporary Income Tax Regs., 50 Fed. Reg. 46022 (Nov. 6, 1985),
(if a taxpayer can establish that the taxpayer’s failure to
produce an adequate record is due to the loss of the record
through circumstances beyond the taxpayer’s control, the taxpayer
may substantiate a deduction by reasonable reconstruction of the
expenditures).
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if the child received over one-half of his support during the
calendar year from his parents who are divorced and the child is
in the custody of one or both parents for more than one-half of
the calendar year, then the child is treated as the qualifying
child of the noncustodial parent if certain requirements are met.
The requirements are met if: (1) The custodial parent signs a
written declaration (in such manner and form as the Secretary may
prescribe) that the custodial parent will not claim the child as
a dependent for the taxable year; and (2) the noncustodial parent
attaches the written declaration to the noncustodial parent’s
return for the taxable year.5 Sec. 152(e)(2).
The written declaration may be made on a form provided by
the Internal Revenue Service (IRS) or a document that conforms to
its substance. Miller v. Commissioner, 114 T.C. 184, 190-191
(2000) (citing sec. 1.152-4T(a), Q&A-3, Temporary Income Tax
Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984)); see also Neal v.
5
Sec. 152(e)(2) was amended, effective for tax years
beginning after Dec. 31, 2004, to provide that a child could be
the noncustodial parent’s qualifying child if a decree of divorce
provides that the noncustodial parent was entitled to the
dependency exemption deduction for the child or the custodial
parent signed a written declaration (in such manner and form as
the Secretary may prescribe) that such parent would not claim the
child as a dependent for the taxable year. See the Working
Families Tax Relief Act of 2004, Pub. L. 108-311, sec. 201, 118
Stat. 1169. This provision might have afforded petitioner
relief, but it was eliminated by retroactive amendments that
restored the DEFRA waiver requirement of sec. 152(e)(2) for tax
years beginning after Dec. 31, 2004. See Gulf Opportunity Zone
Act of 2005, Pub. L. 109-135, sec. 404, 119 Stat. 2632.
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Commissioner, T.C. Memo. 1999-97. The written declaration is
embodied in Form 8332, and it incorporates the requirements of
section 152(e)(2). Miller v. Commissioner, supra at 190.6
In Miller v. Commissioner, supra at 191-195, the Court
stated that in order for the noncustodial parent to claim the
dependency exemption, section 152(e)(2) clearly requires the
custodial parent’s release of the dependency exemption by signing
a written declaration to that effect. Simply attaching a State
court order that was not signed by the custodial parent to the
noncustodial parent’s return does not satisfy the express
requirements of section 152(e)(2). Id. at 196. The mere fact
that the State court granted the taxpayer the right to claim the
dependency exemption is immaterial because a State court cannot
determine issues of Federal tax law. Id. (and cases cited
thereat).
Petitioner claims that he gave a copy of his support order
to his C.P.A., and the C.P.A. allegedly mailed it to the IRS.7
He provided the Court with only one page of the support order.
The page does not contain his former spouse’s signature, and it
6
Form 8332 requires a taxpayer to furnish: (1) The
children’s names and the years for which exemption claims are
released; (2) the custodial parent’s signature and the date
thereof; (3) the custodial parent’s Social Security number; and
(4) the noncustodial parent’s name and Social Security number.
Miller v. Commissioner, 114 T.C. 184, 190 (2000).
7
Petitioner did not call the C.P.A. as a witness.
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merely states that petitioner is entitled to claim “child income
tax benefits” if he satisfies his support obligations.
Petitioner, therefore, has neither proven that the support order
meets the signature requirement of section 152(e)(2)(A), see id.
at 191-196, nor that it otherwise conforms to the substance of
Form 8332, see supra note 6.
Petitioner submitted a letter from his former spouse to the
Court that acknowledges that they agreed that he was entitled to
“claim child income tax benefits during odd numbers years” and
states that he is current with his child support obligations.
The letter, however, was not attached to petitioner’s 2005 Form
1040, and it does not conform to the substance of Form 8832. See
sec. 152(e)(2)(B); supra note 6.
Because petitioner has not proven that he has complied with
the requirements of section 152(e), he is not entitled to his
claimed dependency exemption deduction. See Miller v.
Commissioner, supra at 197. Respondent’s determination is
sustained.
IV. Child Tax Credit
Section 24(a) provides a credit against income tax for each
qualifying child of a taxpayer (as defined in section 152(c)) who
is under 17 years of age. A qualifying child is one for whom a
taxpayer may claim a deduction under section 151. Sec. 24(c)(1).
Because petitioner is not entitled to the dependency exemption
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deduction for his child, he cannot claim a child tax credit for
his child. Respondent’s determination is sustained.
V. Head of Household Filing Status
As relevant here, section 2(b)(1) defines a head of a
household as an unmarried individual who maintains as his home a
household that constitutes for more than one-half of the taxable
year the principal place of abode of the taxpayer’s qualifying
child (as defined in section 152(c) and determined without regard
to section 152(e)) or any other dependent of the taxpayer, if the
taxpayer is entitled to a deduction for the dependent under
section 151 (i.e., a qualifying relative).
Petitioner has provided no evidence as to whether his child
had the same principal place of abode as petitioner for more than
one-half of the taxable year. See sec. 151(c)(1)(B); supra p. 5.
Additionally, it is unclear from the record whether his former
spouse also claimed the child as a dependent in 2005 for Federal
income tax purposes. Where more than one parent claims the child
as a dependent and the child’s parents do not file a joint return
together, then the child is treated as the qualifying child of
the parent with whom the child resided for the longest period of
time during the taxable year or the parent with the highest
adjusted gross income if the child resides with both parents for
the same amount of time during the taxable year. Sec.
152(c)(4)(B). Petitioner has provided no evidence as to these
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issues. Thus, he has failed to prove that his child was his
qualifying child under section 152(c)(4)(B) rather than his
former spouse’s qualifying child. Therefore, petitioner is not
entitled to head of household filing status for 2005.
Respondent’s determination is sustained.
To reflect the foregoing,
Decision will be entered
for respondent.