T.C. Summary Opinion 2009-55
UNITED STATES TAX COURT
RAFAEL ALEX CONTRERAS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5743-08S. Filed April 21, 2009.
Rafael Alex Contreras, pro se.
Rachael J. Zepeda, for respondent.
ARMEN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when the petition was filed.1 Pursuant to section
7463(b), the decision to be entered is not reviewable by any
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 2006,
the taxable year at issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
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other court, and this opinion shall not be treated as precedent
for any other case.
Respondent determined a deficiency of $5,517 in petitioner’s
Federal income tax for 2006. The deficiency is attributable to
respondent’s denial of the three dependency exemption deductions
claimed by petitioner, as well as the denial of petitioner’s
claim for the child tax credit and the additional child tax
credit, and the change in petitioner’s filing status from head of
household to single.2
For the reasons discussed below, we sustain respondent’s
determination.
Background
Some of the facts have been stipulated, and they are so
found. We incorporate by reference the parties’ stipulation of
facts and attached exhibits.
At the time the petition was filed, petitioner resided in
the State of Arizona.
Petitioner and his ex-wife, Stella Orozco, married in 2000
and had three children. They separated in 2005 and were divorced
in April 2006.
Although petitioner initially argued that he and his ex-wife
had joint custody of all three children during the entire year at
2
Any remaining adjustments were purely mechanical in
nature.
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issue, he later conceded that his youngest child, then an infant,
lived primarily with Ms. Orozco. The couple did share joint
custody of the two older children for a portion of 2006, but
petitioner argues that the two older children lived with him for
the greater part of the year.
When the couple separated in 2005, Ms. Orozco and all three
children moved into a condominium, and Ms. Orozco had primary
custody of the children, subject to visitation by petitioner,
until April 2006. Although the couple attempted to work out a
co-parenting plan prior to their official divorce, they were
unable to do so until the Maricopa County court intervened and
ordered them to share joint custody of the two older children.
Because petitioner worked during the week, he saw the children
mainly on weekends until the court-ordered custody arrangement
went into effect in April 2006.
From April 2006 through the end of the year, the two older
children would spend a week with their mother, followed by a week
with their father. Ms. Orozco retained primary custody of the
baby, subject to visitation every other weekend by petitioner.
In 2006, petitioner lived with his mother, paying $300 to
$400 in rent which covered approximately half of his mother’s
mortgage payment. He did not pay utilities, and there is nothing
in the record to suggest he paid significant household expenses.
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On his 2006 Federal income tax return, petitioner claimed
dependency exemption deductions for all three minor children.
Petitioner did not attach–-and his ex-wife did not sign--a Form
8332, Release of Claim to Exemption for Child of Divorced or
Separated Parents, releasing the exemptions for any of the
children. As noted earlier, he also claimed the child tax credit
and the additional child tax credit with respect to each of the
three children. He also elected head of household filing status.
In the notice of deficiency, respondent disallowed
petitioner’s dependency exemption deductions, the child tax
credit, and the additional child tax credit; respondent also
changed petitioner’s filing status to single.
Discussion
I. Burden of Proof
Generally, the Commissioner’s determinations are presumed
correct, and the taxpayer bears the burden of proving that those
determinations are erroneous. Rule 142(a). This principle was
firmly established by the U.S. Supreme Court as early as 1933 and
has been reaffirmed by the Supreme Court as recently as 1992.
See INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch
v. Helvering, 290 U.S. 111, 115 (1933).
Under section 7491(a)(1), the burden of proof may shift from
the taxpayer to the Commissioner if the taxpayer produces
credible evidence with respect to any factual issue relevant to
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ascertaining the taxpayer’s tax liability. Sec. 7491(a)(1). In
this case there is no such shift because petitioner neither
alleged that section 7491 was applicable nor established that he
fully complied with the requirements of section 7491(a)(2). The
burden of proof remains on petitioner.
Deductions and credits are a matter of legislative grace,
and, as just discussed, the taxpayer bears the burden of proving
that he or she is entitled to any deduction or credit claimed.
Rule 142(a); Deputy v. du Pont, 308 U.S. 488, 493 (1940); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
Likewise, the taxpayer is obliged to demonstrate entitlement to
an advantageous filing status, such as head of household. Smith
v. Commissioner, T.C. Memo. 2008-229.
II. Dependency Exemption Deductions
Section 151(c) authorizes an exemption for each individual
who is a dependent of the taxpayer for the taxable year. Section
152 defines the term “dependent”, in pertinent part, to include a
son or daughter of the taxpayer, under the age of 19, who has the
same principal place of abode as the taxpayer for more than one-
half of the year.
In the case of divorced parents, a special rule applies:
SEC. 152(e). Special Rule for Divorced Parents, Etc.--
(1) In General.–-* * * if--
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(A) a child receives over one-half of the
child’s support during the calendar year from
the child’s parents–-
(i) who are divorced or legally
separated under a decree of divorce or
separate maintenance,
(ii) who are separated under a written
separation agreement, or
(iii) who live apart at all times during
the last 6 months of the calendar year, and–-
(B) such child is in the custody of 1 or
both of the child’s parents for more than one-half
of the calendar year, such child shall be treated
as being the qualifying child or qualifying
relative of the noncustodial parent for a calendar
year if the requirements described in paragraph
(2) or (3) are met.[3]
(2) Exception Where Custodial Parent Releases
Claim to Exemption for the Year.–-For purposes of
paragraph (1), the requirements described in this
paragraph are met with respect to any calendar year
if--
(A) the custodial parent signs a written
declaration (in such manner and form as the
Secretary may by regulations prescribe) that such
custodial parent will not claim such child as a
dependent for any taxable year beginning in such
calendar year, and
(B) the noncustodial parent attaches such
written declaration to the noncustodial parent’s
return for the taxable year beginning during such
calendar year.
In other words, the noncustodial parent can gain entitlement
to the deduction if the custodial parent executes a valid written
3
Sec. 152(e)(3), dealing with pre-1985 instruments, is
inapplicable here.
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declaration under section 152(e)(2) releasing the claim to the
deduction. The declaration required under section 152(e)(2) must
be made either on a completed Form 8332 or on a written statement
conforming to the substance of Form 8332. Miller v.
Commissioner, 114 T.C. 184, 188-189 (2000), affd. on another
ground sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir.
2002); Brissett v. Commissioner, T.C. Memo. 2003-310.
Pursuant to section 152(e)(4), the term “custodial parent”
means the parent having custody for the greater portion of the
calendar year. Section 1.152-4(b), Income Tax Regs., provides
that custody is “determined by the terms of the most recent
decree of divorce or separate maintenance, or subsequent custody
decree, or * * * written separation agreement.” If the parents
have split custody, the parent with physical custody the greater
part of the year is deemed to be the custodial parent. Id.
Because the April 2006 divorce decree provided for joint custody
of the two older children, we must examine the facts and
determine which parent had physical custody for the greater part
of the year.4 On the basis of the record before us, we find that
Ms. Orozco had physical custody of the two older children for the
greater part of 2006. For the period before the joint custody
order went into effect, petitioner and Ms. Orozco experimented
4
Recall that petitioner conceded that Ms. Orozco was the
custodial parent of the youngest child for 2006.
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with different custody arrangements, but the children lived with
Ms. Orozco and saw petitioner mainly on weekends. This period
and that arrangement are sufficient to tip the balance in Ms.
Orozco’s favor, and she was the custodial parent in 2006.
Because we find that petitioner was not the custodial parent
during the year at issue, a Form 8332 or its equivalent would
have been required to qualify him for the exception in section
152(e)(2). No such documentation was provided with the tax
return or at trial. Accordingly, petitioner is not entitled to
claim dependency exemption deductions for any of the children.
See Miller v. Commissioner, supra; Chamberlain v. Commissioner,
T.C. Memo. 2007-178.
Although it appears that petitioner may have been entitled
to claim the children as dependents on his tax return pursuant to
the terms of the divorce decree and that Ms. Orozco should have
been asked to sign a Form 8332 for 2006, that matter is beyond
the scope of our jurisdiction.
Respondent’s determination is sustained.
III. Child Tax Credit and Additional Child Tax Credit
Section 24(a) allows a child tax credit with respect to each
qualifying child of the taxpayer. Section 24(d) provides that a
portion of the credit may be refundable, which portion is
commonly referred to as the additional child tax credit.
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As just stated, the child tax credit under section 24 is
allowed with respect to each qualifying child. As relevant
herein, the term “qualifying child” is defined by section
24(c)(1) to mean a qualifying child of the taxpayer as defined in
section 152(c) who has not attained age 17. However, as we have
previously concluded, the three children lived with their mother
for the greater part of 2006. Accordingly, petitioner did not
have a qualifying child as defined in section 152(c) in 2006.
See also sec. 152(c)(1)(B). Therefore, we hold that petitioner
is not entitled to either the child tax credit or an additional
child tax credit for that year. Respondent’s determination is
sustained.
IV. Filing Status
As relevant herein, to qualify for head of household filing
status, a taxpayer must pay more than one-half of the cost of
maintaining a home and have at least one qualifying child as
defined in section 152(c) determined without regard to section
152(e). Sec. 2(b); see sec. 152(c).
Petitioner lacked a qualifying child, and he has not
demonstrated that he paid more than one-half the cost of
maintaining a home in 2006.
Accordingly, we hold that petitioner is not entitled to head
of household filing status for 2006. Respondent’s determination
of single filing status is therefore sustained.
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V. Conclusion
To reflect our disposition of the disputed issues,
Decision will be entered
for respondent.