T.C. Summary Opinion 2010-80
UNITED STATES TAX COURT
ANDRE KEITH MOORE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4377-09S. Filed June 21, 2010.
Frank Agostino, Reuben Muller, and Kevin Carson (student),
for petitioner.
James Caligure, for respondent.
PANUTHOS, Chief 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.
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
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indicated, subsequent section references are to the Internal
Revenue Code in effect for the year in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Respondent determined a $4,896 deficiency in petitioner’s
2007 Federal income tax. After concessions,1 the issues for
decision are: (1) Whether petitioner is entitled to a dependency
exemption deduction for S.S.; (2) whether petitioner is entitled
to claim head of household filing status; (3) whether petitioner
is entitled to the child tax credit and additional child tax
credit; (4) whether petitioner is entitled to an earned income
credit (EIC); and (5) whether petitioner is entitled to a child
care credit.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts, the stipulation of settled issues, and
the attached exhibits are incorporated herein by this reference.
At the time the petition was filed, petitioner resided in New
York.
Petitioner and his girlfriend Lisa Saunders (Ms. Saunders)
met in 1989 and began a relationship shortly thereafter. Their
relationship continued intermittently for a number of years. Ms.
1
Petitioner conceded by stipulation that he is not entitled
to claim an additional child, L.S., as a dependent or for
purposes of the child tax credit, additional child tax credit,
earned income credit, or child care credit. The Court refers to
minor children by their initials. See Rule 27(a)(3).
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Saunders’ son S.S. was born in 1994. Since 1998 petitioner and
Ms. Saunders have lived together with S.S. as a family. Although
petitioner holds Ms. Saunders out as his wife, petitioner and Ms.
Saunders have never been married. Petitioner is not listed as
the father on S.S.’s birth certificate. Petitioner asserted in
his petition that he is not S.S.’s biological father.
Petitioner, Ms. Saunders, and S.S. lived together throughout
2007 in two rooms petitioner rented. Petitioner worked as a bus
driver in 2007 and earned $21,425 in wages with $1,411 of
withholding. Ms. Saunders reported $8,457 of income on her 2007
Federal income tax return. Ms. Saunders also received public
benefits in 2007, but the source and amount of those benefits is
not revealed by the record.
Petitioner timely filed his 2007 income tax return and
claimed total payments of $6,307, which was subsequently refunded
to him. Respondent issued a notice of deficiency on November 28,
2008, determining a deficiency of $4,896. Respondent determined
that petitioner is ineligible for the claimed head of household
filing status, the dependency exemption deductions, the EIC, the
child tax credit, the additional child tax credit, and the child
care credit. Petitioner timely filed a petition in response to
the notice of deficiency.
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Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct, and the taxpayer bears
the burden of showing that the determination is in error. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Deductions
are a matter of legislative grace. Deputy v. du Pont, 308 U.S.
488, 493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S. 435,
440 (1934). A taxpayer bears the burden of proving entitlement
to any deduction claimed. Rule 142(a); INDOPCO, Inc. v.
Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, supra;
Wilson v. Commissioner, T.C. Memo. 2001-139. A taxpayer is
required to maintain records sufficient to substantiate
deductions claimed on his or her income tax return. Sec. 6001;
sec. 1.6001-1(a), (e), Income Tax Regs. The fact that a taxpayer
reports a deduction on the taxpayer’s income tax return is not
sufficient to substantiate the claimed deduction. Wilkinson v.
Commissioner, 71 T.C. 633, 639 (1979); Roberts v. Commissioner,
62 T.C. 834, 837 (1974). Rather, an income tax return is merely
a statement of the taxpayer’s claim; it is not presumed to be
correct. Wilkinson v. Commissioner, supra at 639; Roberts v.
Commissioner, supra at 837; see also Seaboard Commercial Corp. v.
Commissioner, 28 T.C. 1034, 1051 (1957) (a taxpayer’s income tax
return is a self-serving declaration that may not be accepted as
proof for the claimed deduction or exclusion); Halle v.
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Commissioner, 7 T.C. 245 (1946) (a taxpayer’s income tax return
is not self-proving as to the truth of its contents), affd. 175
F.2d 500 (2d Cir. 1949).
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
substantiation and recordkeeping requirements. See sec.
7491(a)(2)(A) and (B). Petitioner therefore bears the burden of
proof. See Rule 142(a).
I. Dependency Exemption Deduction
A. General
A taxpayer is entitled to a dependency exemption deduction
only if the claimed dependent is a “qualifying child” or a
“qualifying relative” as defined under section 152(c) and (d).
Sec. 152(a). A qualifying child is defined as the taxpayer’s
child, brother, sister, stepbrother, or stepsister, or a
descendant of any of them. Sec. 152(c)(1) and (2). The term
“child” includes a legally adopted individual and a foster child
placed in the care of the taxpayer by an authorized placement
agency or by a court order. Sec. 152(f)(1).
B. Qualifying Child--Section 152(c)
In the petition, petitioner asserted he is not S.S.’s
biological father. At trial petitioner testified he is S.S.’s
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biological father. While Ms. Saunders, S.S.’s biological mother,
presented testimony on this subject, her testimony was
inconsistent and confusing with respect to dates and
relationships. No reasonable explanation was provided as to why
petitioner was not listed as the father on S.S.’s birth
certificate. We conclude that petitioner’s assertion in the
petition is more credible and do not accept his uncorroborated,
self-serving testimony that he is S.S.’s biological father. See
Urban Redev. Corp. v. Commissioner, 294 F.2d 328, 332 (4th Cir.
1961), affg. 34 T.C. 845 (1960); Tokarski v. Commissioner, 87
T.C. 74, 77 (1986). Therefore, S.S. is not a qualifying child
because he is not related to petitioner and is not an adopted or
foster child.
C. Qualifying Relative--Section 152(d)
An individual who is not a qualifying child may, under
certain conditions, qualify as a dependent if he or she is a
qualifying relative. Sec. 152(a). Under section 152(d)(1), a
qualifying relative is an individual: (A) Who bears a qualifying
relationship to the taxpayer; (B) whose gross income for the year
is less than the section 151(d) exemption amount; (C) who
receives over one-half of his or her support from the taxpayer
for the taxable year; and (D) who is not a qualifying child of
the taxpayer or of any other taxpayer for the taxable year.
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To fit within the test of a qualifying relative, the
individual must satisfy each of the above requirements. There
are multiple reasons S.S. is not a qualifying relative.
D. Section 152(d)(1)(D)
Section 152(d)(1)(D) requires a qualifying relative to be
neither the taxpayer’s qualifying child nor the qualifying
child of any other taxpayer. A qualifying child must meet all of
the following requirements: (1) Bear a relationship to the
taxpayer such as son or daughter, (2) have the same principal
place of abode as the taxpayer for more than one-half of the
taxable year, (3) be under the age of 19, and (4) not provide
more than one-half of his own support. Sec. 152(c). S.S. is the
qualifying child of Ms. Saunders because he is her son, Ms.
Saunders and S.S. had the same principal place of abode for more
than 6 months (albeit with petitioner), S.S. was 13 years old,
and he did not provide any of his own support. Thus S.S. meets
all four requirements for the year 2007. Since S.S. is the
qualifying child of Ms. Saunders, S.S. cannot be a qualifying
relative for purposes of petitioner’s claimed dependency
exemption deduction. See sec. 152(d)(1)(D).
E. Section 152(d)(1)(A) and (C)
Even if the provisions of section 152(d)(1)(D) were
satisfied, S.S. would fail to qualify under the provisions of
section 152(d)(1)(A) and (C). Section 152(d)(2) lists eight
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qualifying relationships, seven of which involve various familial
relationships which do not apply to the circumstances herein.
The eighth type of qualifying relationship applies to an
individual, other than the taxpayer’s spouse, who has the same
principal place of abode as the taxpayer and is a member of the
taxpayer’s household for the taxable year. Sec. 152(d)(2)(H).
In order for an individual to be considered a member of a
taxpayer’s household, the taxpayer must maintain the household
and both the taxpayer and the individual must occupy the
household for the entire taxable year. Sec. 1.152-1(b), Income
Tax Regs. A taxpayer maintains a household when he or she pays
more than one-half of the expenses for the household. See sec.
2(b); Rev. Rule 64-41, 1964-1 C.B. (Part 1) 84, 85.
The Court is satisfied that S.S. resided with petitioner and
had the same principal place of abode as petitioner. In order
for the Court to determine whether a taxpayer provided over one-
half of the cost of maintaining a household, the taxpayer must
establish the total cost of maintaining the household. See Rosen
v. Commissioner, T.C. Memo. 1994-40; see also Smith v.
Commissioner, T.C. Memo. 2008-229. Costs of maintaining a
household include “property taxes, mortgage interest, rent,
utility charges, upkeep and repairs, property insurance, and food
consumed on the premises.” Sec. 1.2-2(d), Income Tax Regs.
Although petitioner was the primary breadwinner of the family,
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there is evidence that Ms. Saunders also had income for 2007 and
contributed to the household. There is also evidence that Ms.
Saunders received some public assistance in 2007, although the
source and amount are unclear. Petitioner did not keep records
showing the household expenses, the amount that he paid towards
those expenses, or that he paid more than one-half of the total
expenses for the household. Petitioner and Ms. Saunders failed
to provide testimony that might have sufficed in this regard.
Therefore, petitioner has not proven that he has a qualifying
relative, sec. 152(d)(1)(A), or that S.S. received more than half
of his support from petitioner, sec. 152(d)(1)(C). Accordingly,
S.S. is not a qualifying relative under either section
152(d)(1)(A) or (C).
We recognize that petitioner treated S.S. as his child and
continues to treat S.S. as his child. Despite petitioner’s good
intentions of providing a home and support for S.S., petitioner
does not meet the requirements set forth in the Internal Revenue
Code and is not entitled to claim S.S. as his dependent for 2007.
II. Head of Household Filing Status
Section 1(b) imposes a special tax rate on an individual
taxpayer who files a Federal income tax return as a head of
household. Section 2(b) in pertinent part defines a head of
household as an individual taxpayer who: (1) Is unmarried as of
the close of the taxable year and is not a surviving spouse; and
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(2) maintains as his home a household that constitutes for more
than one-half of the taxable year the principal place of abode,
as a member of such household, of a dependent for whom the
taxpayer is entitled to a deduction under section 151. See also,
e.g., Rowe v. Commissioner, 128 T.C. 13, 16-17 (2007). The
taxpayer is considered as maintaining a household only if the
taxpayer furnishes over one-half of the cost of maintaining the
household. Sec. 2(b)(1).
Since petitioner does not have a dependent and has not
provided evidence to show he maintained the household, he is not
entitled to head of household filing status.
III. Child Tax Credit
Section 24(a) provides a credit with respect to each
qualifying child of the taxpayer. Section 24(c)(1) defines the
term “qualifying child” as “a qualifying child of the taxpayer
(as defined in section 152(c)) who has not attained age 17.”2
The child tax credit may not exceed the taxpayer’s regular
tax liability. Sec. 24(b)(3). Where a taxpayer is eligible for
the child tax credit, but the taxpayer’s regular tax liability is
less than the amount of the child tax credit potentially
available under section 24(a), section 24(d) makes a portion of
the credit, known as the additional child tax credit, refundable.
2
The credit is reduced by $50 for each $1,000 (or fraction
thereof) by which an individual’s modified adjusted gross income
exceeds specified amounts not relevant herein. Sec. 24(b).
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Since S.S. is not petitioner’s qualifying child, petitioner
is not entitled to the child tax credit or the additional child
tax credit.
IV. Earned Income Credit
An eligible individual is entitled to a credit against his
Federal income tax liability, calculated as a percentage
of his earned income, subject to certain limitations. Sec.
32(a)(1); Rowe v. Commissioner, supra at 15. Different
percentages and amounts are used to calculate the EIC, depending
on whether the eligible individual has no qualifying children,
one qualifying child, or two or more qualifying children. Sec.
32(b); Rowe v. Commissioner, supra at 15. A “qualifying child”
means a qualifying child of the taxpayer as defined in section
152(c). Sec. 32(c)(3)(A).
As previously discussed, S.S. is not petitioner’s qualifying
child; thus, petitioner is not entitled to the EIC with one
qualifying child for 2007.3
V. Child Care Credit
Section 21(a) allows a taxpayer a credit for a certain
percentage of employment-related expenses incurred to enable the
3
Petitioner’s adjusted gross income for 2007 exceeded
$12,590; accordingly he is also ineligible to claim an earned
income credit under sec. 32(c)(1)(A)(ii) as an individual without
a qualifying child. See Rev. Proc. 2006-53, sec. 3.07(1), 2006-2
C.B. 996, 1000.
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taxpayer to be employed gainfully, including expenses for the
care of a “qualifying individual”. See sec. 21(a) and (b)(2). A
qualifying individual must be: (1) The taxpayer’s qualifying
child or qualifying relative under the age of 13; (2) certain of
the taxpayer’s qualifying children or relatives who are unable to
care for themselves; or (3) a spouse of the taxpayer unable to
care for himself or herself who lives with the taxpayer for more
than half of the taxable year. Sec. 21(b)(1).
Because petitioner has no qualifying individuals, he is not
entitled to the child care credit for 2007.
Conclusion
For reasons discussed herein, petitioner is not entitled to
claimed deductions, credits, or head of household filing status.
Respondent’s determination is therefore sustained.
To reflect the foregoing,
Decision will be entered
for respondent.