T.C. Summary Opinion 2012-10
UNITED STATES TAX COURT
KEVIN ALLEN HUDGINS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 27783-10S. Filed January 30, 2012.
Kevin Allen Hudgins, pro se.
Anita A. Gill, for respondent.
DEAN, 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 indicated, subsequent section references
are to the Internal Revenue Code in effect for the year at issue,
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and Rule references are to the Tax Court Rules of Practice and
Procedure.
Respondent originally determined a deficiency in
petitioner’s Federal income tax of $4,875 for 2009. Respondent
asserted an increase in the deficiency at the trial of this case
and subsequently filed a motion to amend the pleadings to conform
to the evidence. That motion, asserting an increased deficiency
of $13,415, was granted by the Court.
The issues for decision1 are whether petitioner: (a) Had
unreported income of $49,801; (b) is entitled to deductions for
two dependency exemptions; (c) is entitled to head of household
filing status; (d) is entitled to the earned income credit; and
(e) is entitled to the additional child tax credit.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the exhibits received in evidence
are incorporated herein by reference. Petitioner resided in Ohio
when the petition was filed.
Background
Petitioner timely filed his Federal income tax return for
2009 using head of household filing status. Petitioner reported
wages and gross income of $9,642. He claimed deductions for
1
Respondent’s pretrial memorandum states that the accuracy-
related penalty under sec. 6662(a) is at issue, but it was not
the subject of a determination in the notice of deficiency, nor
was it included in respondent’s motion asserting an increased
deficiency.
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dependency exemptions for MB and KC2 who he claimed are his
grandchildren. Petitioner was married during 2009. One of the
children is the granddaughter of his wife, and the other is his
wife’s nephew.
In addition to the wages reported on petitioner’s income tax
return for 2009, the parties agree that petitioner received
$9,522 from SCMS Administrative Services, Inc., as short-term
disability compensation and $27,541.97 from General Motors, LLC,
as wages. Additionally, the Ohio Department of Job and Family
Services (Family Services) reported on Form 1099-G, Certain
Government Payments, that it paid petitioner $12,171 in 2009.
Discussion
Generally, the Commissioner’s determinations in a notice of
deficiency are presumed correct, and the taxpayer has the burden
of proving that those determinations are erroneous. See Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). In some
cases the burden of proof with respect to relevant factual issues
may shift to the Commissioner under section 7491(a). As
petitioner did not argue or prove that the requirements of
section 7491(a) have been met, the burden of proof does not shift
to respondent.
2
The Court redacts the names of minor children. See Rule
27(a)(3).
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Unreported Unemployment Compensation
The only unreported income issue about which petitioner
raised an objection was the amount reported on the Form 1099-G.
If a taxpayer asserts a reasonable dispute with respect to any
item of income reported on a third-party information return and
he has fully cooperated3 with the Commissioner, the Commissioner
will have the burden of producing reasonable and probative
information concerning the item of income in addition to the
information return. Sec. 6201(d). Moreover, because
respondent’s motion to amend the pleadings to conform to the
evidence, encompassing the allegation of unreported unemployment
compensation, raises an increased deficiency, respondent bears
the burden of persuasion on the unemployment compensation. See
Rule 142(a)(1).
Petitioner testified that he was “laid off for two months.”
And he questioned: “How could I draw that type of money in two
months?” He testified that he had a note from his job stating
how long he was out of work, but he did not bring it with him to
the trial.
To meet his burden of producing evidence under section
6201(d), respondent introduced into evidence, in addition to the
Form 1099-G, a copy of the “Continued Claim/Benefit Payment
3
Although respondent represents that petitioner failed to
participate in scheduled Appeals conferences, there is no
evidence that petitioner failed to cooperate fully.
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Summary” (CCBPS) maintained by Family Services pertaining to
petitioner. The records show “GAP” or gross amount paid, “CSI”
or child support withheld, “OP” or overpayment, and “FAC” or
“Federal additional compensation”.4 According to the records of
Family Services, petitioner was paid certain unemployment
benefits from January through July 2009, and FAC payments were
paid through August 2009.
Petitioner testified that “I never received those checks”
because he was “back at work.” Petitioner, however, did admit
that for 2 months he received a check every other week for a
little over $600. He added that “I pay child support”. After
child support was withheld, he testified, “I think I got a little
over $600.00.”
The CCBPS shows that petitioner was paid weekly and
generally received GAP of $452 plus FAC of $25 and CSI of $226.
It appears from the record, however, that petitioner was paid an
amount in excess of child support and FAC for only 11 weeks
because he had been “overpaid”. Attached to the CCBPS is an
“Overpayment Summary” and a “Claim Summary”. The CCBPS shows
entries for 15 weeks of “Denied/Overpaid” with respect to the GAP
of $452 which totals $6,780.
4
There is a notation on the CCBPS that the FAC entries were
$25 per week.
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According to the Claim Summary, petitioner was paid $4,972
in unemployment benefits and $250 of FAC. The $4,972 equals 11
times $452. When $4,972 in unemployment benefits is added to the
$6,780 denied/overpayment amount and $250 of FAC, the sum is
$12,002, an amount that comports with the Form 1099-G.
There is no legal or factual explanation, however, for
including in income for 2009 amounts that were “denied” to
petitioner in 2009 because of overpayments. The Overpayment
Summary shows amounts for “Fraud” and “Non-Fraud” with respect to
December 2007 and for the period between February and August
2009. It appears from the Overpayment Summary that petitioner
may have received unemployment benefits in at least 1 year before
the year at issue. The Court cannot determine the temporal or
numerical relationship between the amounts shown as denied on the
CCBS and the amounts shown on the Overpayment Summary, the Claim
Summary, and the Form 1099-G.
It was respondent’s burden to show that petitioner received
the $12,171 reported on the Form 1099-G. Respondent has failed
to persuade the Court that petitioner received in 2009 more than
11 payments of $452 plus FAC of $250, or $5,222.
The Court finds that petitioner received $5,222 from Family
Services that was not reported in income for 2009.
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Dependency Exemption Deductions
Petitioner claimed deductions for two dependency exemptions
for 2009, which respondent disallowed in the notice of
deficiency. Section 151 allows deduction of an exemption amount
for each dependent as defined in section 152. Sec. 151(c).
Section 152(a) provides that a dependent means a “qualifying
child” or a “qualifying relative”. As relevant here, section
152(c) defines a qualifying child as an individual: (1) Who
bears a relationship to the taxpayer, such as a grandchild or
nephew of the taxpayer; (2) who has the same principal place of
abode as the taxpayer for more than one-half of the tax year; (3)
who has not attained the age of 19 or is a student who has not
attained the age of 24 as of the close of the calendar year; and
(4) who has not provided over one-half of such individual’s own
support for the calendar year in which the tax year of the
taxpayer begins. Petitioner agrees that he is not related to the
children. The children are not his qualifying children. The
Court considers next whether the children are his qualifying
relatives under section 152(d).
In pertinent part section 152(d) provides that an individual
is a qualifying relative of the taxpayer if: (1) That individual
has the same principal place of abode as the taxpayer and is a
member of the taxpayer’s household; (2) the taxpayer provides
over one-half of the individual’s support for that year; and (3)
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that individual is not the qualifying child of the taxpayer or of
any other taxpayer for that year. Sec. 152(d)(1), (2)(H).
Respondent concedes that petitioner’s wife’s grandchild
resided with petitioner and his wife. But petitioner offered no
evidence on the other requirements of section 152(d) with respect
to the grandchild and no evidence at all on any of the
requirements with respect to the nephew.
The Court sustains respondent’s determination that
petitioner is not entitled to dependency exemption deductions for
2009.
Head of Household Filing Status
Petitioner filed as “head of household” for 2009. In the
notice of deficiency, respondent determined petitioner’s proper
filing status to be married filing separately.
Section 1(b) imposes a special tax rate on individuals
filing as heads of household. A head of household is defined in
section 2(b) as an individual who is not married at the close of
the taxable year and who maintains as his home a household that
constitutes for more than one-half of the taxable year the
principal place of abode for a qualifying child or an individual
for whom he is entitled to a deduction under section 151. Sec.
2(b)(1)(A)(i).
Petitioner was married at the end of the taxable year, and
the Court has found that he had no qualifying children and no
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dependents. Therefore, respondent’s determination on this issue
is sustained.
Earned Income Credit
Petitioner claimed an earned income credit for taxable year
2009 as an individual with two qualifying children. Respondent
determined that petitioner is not entitled to the earned income
credit for 2009.
Section 32(a)(1) allows an eligible individual an earned
income credit against the individual’s income tax liability.
Section 32(a)(2) limits the credit allowed, and section 32(b)
prescribes different percentages and amounts used to calculate
the credit that are based on whether the eligible individual has
no qualifying children, one qualifying child, or two or more
qualifying children. The term “qualifying child” means a
qualifying child of the taxpayer as defined in section 152(c).
Sec. 32(c)(3). The Court has determined that petitioner had no
qualifying children for 2009.
Further, a married individual, as defined in section 7703,
will qualify for the credit only if a joint return is filed for
the taxable year. Sec. 32(d). As petitioner did not file a
joint return, he is not entitled to claim an earned income
credit. Even if he had filed a joint return, he would not be
entitled to the credit as his adjusted gross income is above the
level for which any credit is allowed. See Rev. Proc. 2009-21,
sec. 3.06, 2009-16 I.R.B. 860.
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Accordingly, petitioner is not eligible for an earned income
credit. Respondent’s determination on this issue is sustained.
Additional Child Tax Credit
For 2009 petitioner did not claim a child tax credit, but he
claimed an “additional child tax credit” of $996. Respondent
determined that petitioner is not entitled to an additional child
tax credit.
Section 24(a) authorizes a child tax credit with respect to
each qualifying child of the taxpayer for whom he is allowed a
deduction under section 151. The term “qualifying child” is
defined in section 24(c). A qualifying child means a qualifying
child of the taxpayer as defined in section 152(c) who has not
attained the age of 17 as of the close of the taxable year. Sec.
24(c)(1). Because petitioner has not shown that he is entitled
to a deduction under section 151 for a qualifying child as
described in section 152(c), he is not entitled to a child tax
credit.
In the absence of other nonrefundable personal credits, a
taxpayer is allowed to claim a child tax credit in an amount that
is the lesser of the full child tax credit or the taxpayer’s
Federal income tax liability for the taxable year. See sec.
26(a).
If the child tax credit exceeds the taxpayer’s Federal
income tax liability for the taxable year, a portion of the child
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tax credit may be refundable as an “additional child tax credit”
under section 24(d)(1). Because petitioner is not entitled to a
child tax credit, he is not entitled to an additional child tax
credit.
To reflect the foregoing,
Decision will be entered
under Rule 155.