T.C. Summary Opinion 2010-173
UNITED STATES TAX COURT
MOHAMED M. MAGAN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6909-09S. Filed December 13, 2010.
Mohamed M. Magan, pro se.
Jeffrey A. Schlei, 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
year 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 a deficiency in petitioner’s 2007
Federal income tax of $5,871.
The issues for decision are:
(1) Whether petitioner is entitled to dependency exemption
deductions for his two nieces;
(2) whether petitioner is entitled to the earned income
credit for his two nieces; and
(3) whether petitioner is entitled to the child tax credit
and an additional child tax credit for his two nieces.
Background
Some of the facts have been stipulated, and they are so
found. We incorporate by reference the parties’ stipulation of
facts and accompanying exhibits. Petitioner resided in the State
of California when the petition was filed. Petitioner has
limited English proficiency, and his testimony was given through
an interpreter at trial.
In January 2007, petitioner moved from the State of
Minnesota to the State of California in order to be closer to his
sister and her family. Throughout 2007 petitioner’s sister was
married and lived with her husband and five children in a single-
family home. Petitioner’s sister was a stay-at-home mom and her
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husband was a full-time student who only started working in late
2007.
From January to August 2007, petitioner worked nights.
Although petitioner did not live with his sister and her family
during this time, he would spend much of his time at their home
helping with childcare and doing the family’s errands. In
addition to assisting with childcare and errands, petitioner also
provided his sister’s family with financial assistance.
In August 2007, petitioner obtained a job located far away
from where his sister and her family lived. For the remainder of
2007, petitioner was unable to help his sister with child care
and errands, but he continued to provide financial assistance.
Petitioner’s 2007 Federal income tax return was completed by
a professional tax return preparer. On the return petitioner
claimed two dependency exemption deductions, the earned income
credit, and the child tax credit and additional child tax credit
for two nieces (his sister’s daughters).
In a notice of deficiency, respondent denied the dependency
exemption deductions, the earned income credit, and the child tax
credit and additional child tax credit.
Discussion
A. Burden of Proof
Generally, the Commissioner’s determinations are presumed
correct, and the taxpayer bears the burden of proving that those
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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 proof to
establish 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 did not allege
that section 7491 applies, nor did he introduce the requisite
evidence to invoke that section; therefore, the burden of proof
remains on petitioner.
B. Dependency Exemption Deductions
In general, a taxpayer may claim a dependency exemption
deduction “for each individual who is a dependent (as defined in
section 152) of the taxpayer for the taxable year.” Sec. 151(a),
(c). Section 152(a) defines a dependent to include a “qualifying
child” or a “qualifying relative.” A qualifying child must,
inter alia, share the same principal place of abode as the
taxpayer for more than one-half of the year in issue. Sec.
152(c)(1)(B). A qualifying relative must not, inter alia, be a
qualifying child of another taxpayer for the year in issue. Sec.
152(d)(1)(D).
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Petitioner claims that he is entitled to dependency
exemption deductions for his two nieces because he provided
financial assistance, as well as help with child care and the
family’s errands. We commend petitioner for contributing to the
support of his sister’s family. However, he has not demonstrated
that he and his nieces shared the same principal place of abode
for any portion, much less for more than one-half, of the taxable
year in issue. See sec. 152(c)(1)(B). In addition, petitioner’s
nieces are the qualifying children of petitioner’s sister and her
husband for the year in issue. See sec. 152(d)(1)(D).
Accordingly, we hold that petitioner is not entitled to
dependency exemption deductions for his nieces for 2007.
C. Earned Income Tax Credit
In the case of an eligible individual, section 32(a)(1)
allows an earned income credit. An “eligible individual”
includes an individual who has a qualifying child for the taxable
year. Sec. 32(c)(1)(A)(i).2 As relevant herein, a “qualifying
child” means a qualifying child as defined in section 152(c).
Sec. 32(c)(3). However, as we have just concluded, petitioner
2
An eligible individual also includes an individual who
does not have a qualifying child. See sec. 32(c)(1)(A)(ii).
However, an earned income credit is available to such an
individual only if his or her adjusted gross income is less than
$12,590. See Rev. Proc. 2006-53, sec. 3.07(1), 2006-2 C.B. 996,
1000. Because petitioner’s adjusted gross income exceeded that
amount in 2007, petitioner is not entitled to an earned income
credit for that year without a qualifying child.
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did not have a qualifying child as defined in section 152(c) in
2007. Accordingly, we hold that petitioner is not entitled to an
earned income credit for 2007.
D. Child Tax Credit and Additional Child Tax Credit
Section 24(a) allows taxpayers a credit against tax imposed
for each qualifying child. 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 the
age of 17. 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. As we have previously concluded,
petitioner did not have a qualifying child as defined in section
152(c) in 2007; accordingly, we hold that he is not entitled to a
child tax credit or an additional child tax credit for 2007.
Conclusion
We have considered all of the arguments made by petitioner,
and, to the extent that we have not specifically addressed those
arguments, we conclude that the arguments do not support results
contrary to those reached herein.
To reflect the foregoing,
Decision will be entered
for respondent.