T.C. Summary Opinion 2009-192
UNITED STATES TAX COURT
PAUL J. TWARAGOWSKI, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19838-08S. Filed December 15, 2009.
Paul J. Twaragowski, pro se.
John M. Janusz, 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 the
years in 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 deficiencies in petitioner’s Federal
income taxes for 2003 and 2004 of $6,895 and $5,734,
respectively, and additions to tax under section 6651(a)(1) for
failure to timely file a tax return of $771 and $146.80,
respectively. Respondent subsequently conceded the addition to
tax for failure to timely file for 2004. After additional
concessions the issues remaining for decision are:
(1) Whether petitioner is entitled to alimony deductions in
excess of the amounts allowed and conceded by respondent for 2003
and 2004. We hold that he is not.
(2) Whether petitioner is entitled to dependency exemption
deductions for three children for 2003 and 2004. We hold that he
is not.
(3) Whether petitioner is entitled to child tax credits for
2003 and 2004. We hold that he is not.
(4) Whether petitioner is entitled to head of household
filing status for 2003 and 2004. We hold that he is not.
(5) Whether petitioner is liable for the addition to tax for
failure to timely file for 2003. We hold that he is.
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Background
None of the facts have been stipulated by the parties.
Petitioner resided in the State of New York when the petition was
filed.
Petitioner and his ex-wife separated in 1996 and divorced in
2005. During the marriage, petitioner and his ex-wife had four
children.
Petitioner untimely filed his 2003 Federal income tax
return, which respondent received on June 6, 2005. Petitioner
timely filed his 2004 Federal income tax return pursuant to an
extension.
On the returns for 2003 and 2004 petitioner claimed
deductions for alimony of $20,160 and $19,928, respectively,
based (in part) on garnishments from petitioner’s paychecks. In
a notice of deficiency respondent reduced the alimony deductions
for 2003 and 2004 to $8,595 and $8,128, respectively. Respondent
later conceded that petitioner is entitled to alimony deductions
for 2003 and 2004 of $19,365 and $19,600, respectively. At trial
petitioner did not provide documentation (or testimony)
establishing alimony deductions in excess of the amounts allowed
and conceded by respondent.
Petitioner also claimed dependency exemption deductions for
three children and child tax credits for one child and elected
head of household filing status. At no time during the years in
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issue did petitioner’s children live with him, nor did he visit
them. In the notice of deficiency respondent denied the
dependency exemption deductions and the child tax credits and
changed petitioner’s filing status to married filing separately.
Discussion
A. 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); 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
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). 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
ascertaining the taxpayer’s liability. Petitioner has not
alleged that section 7491 applies, nor did he introduce the
requisite evidence to invoke that section; therefore, the burden
of proof remains on petitioner.
Section 7491(c) provides that the Commissioner bears the
burden of production with respect to an addition to tax. To meet
this burden, the Commissioner must introduce evidence indicating
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that it is appropriate to impose the relevant addition to tax.
Higbee v. Commissioner, 116 T.C. 438, 446 (2001). Once the
Commissioner meets this burden, the taxpayer bears the burden to
produce evidence regarding reasonable cause. Id. at 446-447.
Respondent has met his burden.
B. Alimony Deductions
Section 71(a) provides the general rule that the payee
spouse must include alimony payments in gross income. Section
215(a) provides the complementary general rule that the payor
spouse may deduct alimony payments in “an amount equal to the
alimony or separate maintenance payments paid during such
individual’s taxable year.”
Respondent has allowed and conceded that petitioner is
entitled to deduct alimony payments for 2003 and 2004 of $19,365
and $19,600, respectively. Petitioner has not provided one iota
of evidence establishing that he is entitled to alimony
deductions in any greater amounts. Thus, petitioner is not
entitled to alimony deductions in excess of the amounts allowed
and conceded by respondent for the years in issue.
C. Dependency Exemption Deductions
In general, a taxpayer may claim a dependency exemption
deduction for a dependent, such as the taxpayer’s child, if the
taxpayer provides over one-half of the dependent’s support for
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the year. Secs. 151(a), (c)(1), 152(a). An individual cannot be
a dependent of more than one taxpayer. See sec. 151(d)(2).
In the case of a child of divorced parents, if a child
receives over one-half of his support during the year from his
parents and is in the custody of one or both parents for more
than one-half of the year, then the child shall be treated as
receiving over one-half of his support during the year from the
parent having custody for a greater portion of the year.2 Sec.
152(e)(1). That parent is referred to as the “custodial parent”.
Id.
Although petitioner claimed dependency exemption deductions
for three children, during the years in issue the children did
not live with him, nor did he visit them. Rather, the children’s
mother was the custodial parent. Petitioner testified that he
was required by court order to maintain health coverage for the
children and that in order to do so, he was required by his
employer to claim the children as dependents on his tax return.
Despite this assertion, petitioner, as the noncustodial parent,
2
The exceptions to the general rule of sec. 152(e)(1) do
not apply to the facts of this case. For example, sec. 152(e)(2)
allows the noncustodial parent to claim the dependency exemption
deduction for a child if the custodial parent signs a written
declaration, or Form 8332, Release of Claim to Exemption for
Child of Divorced or Separated Parents, releasing his or her
claim to the deduction and the noncustodial parent attaches the
declaration or Form 8332 to his or her tax return.
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is not entitled to dependency exemption deductions for the three
children for the years in issue.
D. Child Tax Credit
Section 24(a) allows taxpayers a credit against tax imposed
for each qualifying child. Section 24(c)(1)(A) provides that a
“qualifying child” for purposes of section 24 is any individual
if “the taxpayer is allowed a deduction under section 151 with
respect to such individual for the taxable year”. Because
petitioner is not entitled to dependency exemption deductions for
either year under section 151, he is not entitled to a child tax
credit under section 24.
E. Head of Household Filing Status
As relevant herein, section 2(b)(1)(A)(i) provides that to
qualify for head of household filing status, a taxpayer must
maintain as his home a household which constitutes the principal
place of abode of an unmarried child for at least 6 months during
the year. Petitioner testified that he filed his returns as a
head of household at the behest of his tax preparer. However,
petitioner admitted that in hindsight the head of household
filing status was not well founded.3 For the years in issue, the
children did not live with petitioner but rather with their
3
Petitioner stated: “To be quite frank, I have considered
the IRS statements against [head of household filing status] and
basically feel that I really don’t have much standing to maintain
that position of head of household status.”
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mother. As such, petitioner’s home was not the principal place
of abode of an unmarried child, and, therefore, he is not
entitled to head of household filing status.
F. Addition to Tax for Failure To File
Section 6651(a)(1) imposes an addition to tax for failure to
file a return by its due date. The addition equals 5 percent for
each month or fraction thereof that the return is late, not to
exceed 25 percent. Sec. 6651(a)(1).
In the absence of an extension, the last date for petitioner
to have timely filed his Federal income tax return for 2003 was
Thursday, April 15, 2004. Sec. 6072(a). Petitioner’s 2003
Federal income tax return was not received, however, until June
6, 2005.
“A failure to file a tax return on the date prescribed leads
to a mandatory penalty unless the taxpayer shows that such
failure was due to reasonable cause and not due to willful
neglect.” McMahan v. Commissioner, 114 F.3d 366, 368 (2d Cir.
1997), affg. T.C. Memo. 1995-547. A showing of reasonable cause
requires a taxpayer to show that he exercised “ordinary business
care and prudence” but was nevertheless unable to file the return
within the prescribed time. United States v. Boyle, 469 U.S.
241, 246 (1985); sec. 301.6651-1(c)(1), Proced. & Admin. Regs.
Petitioner testified that the 2003 return was untimely
because there was the possibility that he and his then wife would
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file a joint return, even though they were separated and had been
since 1996. When it became clear to petitioner that a joint
return would not be possible, he filed a return, albeit untimely.
Although a joint return may have been petitioner’s
preference, after 7 years of separation this is not a sufficient
ground for delay. Thus, on the basis of the record before us,
petitioner has not demonstrated that his failure to timely file
his 2003 Federal income tax return was due to reasonable cause
and not willful neglect. See sec. 301.6651-1(c), Proced. &
Admin. Regs. Therefore, petitioner is liable for the addition to
tax under section 6651(a)(1) for 2003.
Conclusion
We have considered all of the arguments made by petitioner,
and, to the extent that we have not specifically addressed them,
we conclude that they are moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered
under Rule 155.