PURSUANT TO INTERNAL REVENUE CODE
SECTION 7463(b),THIS OPINION MAY NOT
BE TREATED AS PRECEDENT FOR ANY
OTHER CASE.
T.C. Summary Opinion 2013-36
UNITED STATES TAX COURT
JOYCE COULTMAN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16433-11S. Filed May 9, 2013.
Joyce Coultman, pro se.
Monica E. Koch and Deborah Aloof, for respondent.
SUMMARY OPINION
VASQUEZ, Judge: This case was heard pursuant to the provisions of
section 7463 of the Internal Revenue Code (Code) in effect when the petition was
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filed.1 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.
Respondent determined a deficiency of $3,732 in petitioner’s Federal
income tax for 2008. The issues for decision are: (1) whether petitioner is entitled
to a dependency exemption deduction for her grandson, E.P.;2 (2) whether
petitioner is entitled to file as head of household; (3) whether petitioner is entitled
to the child care credit; and (4) whether petitioner is entitled to the child tax credit.
Background
Some of the facts have been stipulated and are so found. The stipulation of
facts and the attached exhibits are incorporated herein by this reference. Petitioner
resided in New York at the time she filed the petition.
Petitioner is a member of a housing cooperative through which she owns an
apartment in Brooklyn, New York. In 2008 she lived in that apartment with her
daughter Nicole, Nicole’s son (petitioner’s grandson) E.P., and Nicole’s daughter.
Petitioner, age 75 at the time of trial, was employed as a nurse practitioner. She
1
Unless otherwise indicated, all section references are to the Code in effect
for the year at issue, and all Rule references are to the Tax Court Rules of Practice
and Procedure.
2
This Court refers to minors by their initials. See Rule 27(a)(3).
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paid the maintenance fees for the apartment in addition to the utility bills. She and
Nicole each purchased their own groceries, and Nicole provided groceries for E.P.
and her daughter.
In 2008 E.P. was 12 years old and attended a private kindergarten on
account of a mental disability. Petitioner reported $2,400 of child and dependent
care expenses on her Form 1040A, U.S. Individual Income Tax Return, for 2008.
Petitioner timely filed her Form 1040A and claimed a dependency
exemption deduction for E.P., head of household filing status, a child care credit,
and a child tax credit.
Discussion
I. Burden of Proof
As a general rule, the Commissioner’s determinations in a notice of
deficiency 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). However, section 7491(a)(1) and (2) shifts the burden of proof
to the Commissioner as to any factual issue relevant to a taxpayer’s liability for tax
if (1) the taxpayer introduces credible evidence with respect to such issue, and (2)
the taxpayer satisfies certain other conditions, including cooperation with the
Government’s requests for witnesses, information, and documents. See Rule
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142(a)(2). The burden is on the taxpayer to show that he satisfied these
prerequisites. See Richardson v. Commissioner, T.C. Memo. 2005-143; H.R.
Conf. Rept. No. 105-599, at 240, 242 (1998), 1998-3 C.B. 747, 993.
With respect to the dependency exemption deduction, the factual issue is
whether Nicole claimed E.P. as a dependent. Petitioner credibly testified that to
her knowledge Nicole did not claim E.P. Petitioner expressed disbelief that Nicole
had claimed E.P. and questioned whether it was even possible for Nicole to claim
E.P. since Nicole did not work during 2008. Furthermore, petitioner has
cooperated with the Internal Revenue Service. We find that petitioner has
produced credible evidence that Nicole did not claim E.P., and thus the burden of
proof shifts to respondent with respect to the dependency exemption deduction.
As discussed below, petitioner failed to produce credible evidence with
respect to the child care credit. Thus, the burden of proof does not shift to
respondent for that issue.
II. Dependency Exemption Deduction
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
year. Sec. 151(a), (c). Section 152(a) defines the term “dependent” to mean either
a “qualifying child” or a “qualifying relative.”
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As relevant here, a qualifying child of a taxpayer is an individual that: (1)
bears a relationship to the taxpayer as described in section 152(c)(2); (2) has the
same principal place of abode as the taxpayer for more than one-half of the taxable
year; (3) meets the age requirements in section 152(c)(3) specifying an individual
under the age of 19 or under the age of 24 if the individual is a student at the close
of the year; and (4) has not provided over one-half of his or her own support for
the year.3 Sec. 152(c)(1).
E.P. satisfies the requirements to be petitioner’s qualifying child: (1) he is
petitioner’s grandson; (2) he had the same principal place of abode as petitioner
for more than one-half of 2008; (3) he was a minor during 2008; and (4) he did not
provide more than one-half of his own support in 2008. See sec. 152(c)(1)(A)-
(D).
However, respondent argues that petitioner is not allowed the dependency
exemption deduction because of section 152(c)(4)(A)(i), known as the tie-breaker
rule. Specifically, section 152(c)(4)(A)(i) provides: “If * * * an individual may
be and is claimed as a qualifying child by 2 or more taxpayers for a taxable year
3
Sec. 152(c)(1)(E) was added in 2008 to impose an additional requirement:
the individual did not file a joint return for the taxable year at issue. However, this
amendment is effective only for taxable years beginning after December 31, 2008.
See Fostering Connections to Success and Increasing Adoptions Act of 2008, Pub.
L. No. 110-351, sec. 501(d), 122 Stat. at 3980.
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beginning in the same calendar year, such individual shall be treated as the
qualifying child of the taxpayer who is * * * a parent of the individual”.4
Respondent argues that both petitioner and Nicole claimed E.P. and that under the
tie-breaker rule E.P. is treated as the qualifying child of Nicole, not petitioner.
However, respondent has failed to introduce any evidence that Nicole, or
anyone else, claimed E.P. As discussed above, petitioner presented credible
evidence that Nicole did not claim E.P. and the burden shifted to respondent to
establish that she did. Respondent failed to show that two taxpayers claimed E.P.
for 2008. Thus, the tie-breaker rule does not apply. Accordingly, because E.P.
was petitioner’s qualifying child in 2008, petitioner properly claimed him for
2008.5
4
The Court notes that this language has changed to: “if an individual may
be claimed as a qualifying child by 2 or more taxpayers for a taxable year
beginning in the same calendar year, such individual shall be treated as the
qualifying child of the taxpayer who is * * * a parent of the individual”. Sec.
152(c)(4)(A)(i) (2012). This change was effective for taxable years beginning
after December 31, 2008. See Fostering Connections to Success and Increasing
Adoptions Act of 2008, sec. 501(d).
5
Because the Court finds that E.P. is petitioner’s qualifying child for 2008,
we do not address whether E.P. is petitioner’s qualifying relative. See sec.
152(d)(1)(D).
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III. Head of Household Filing Status
As relevant here, section 2(b)(1) defines “head of household” as an
unmarried individual who maintains as his home a household that constitutes for
more than one-half of the taxable year the principal place of abode of either a
qualifying child or any other dependent of the taxpayer, if the taxpayer is entitled
to a deduction for the dependent under section 151. See sec. 2(b)(1).
Petitioner maintained her home as E.P.’s principal abode for more than half
of the taxable year because she paid the maintenance fees and utilities every
month. The Court has already found that E.P. was petitioner’s qualifying child in
2008. Therefore, she is entitled to file as head of household for 2008. See id.
IV. Child Care Credit
Also known as the child care credit, section 21(a) and (b)(2) generally
provides for a child care credit with respect to employment-related expenses that
are incurred to enable the taxpayer to be gainfully employed, including expenses
to care for a “qualifying individual.” With exceptions not relevant here, a
qualifying individual is generally defined as an individual who is either a
qualifying child of the taxpayer (within the meaning of section 152(a)(1)) who has
not turned 13 or a dependent of the taxpayer who is physically or mentally
incapable of caring for himself or herself and shares the same place of abode with
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the taxpayer for more than one-half of the taxable year. Sec. 21(b)(1). In addition,
taxpayers claiming the child care credit are required to substantiate the claim by
keeping adequate records or through other sufficient evidence. See sec. 1.21-1(k),
Income Tax Regs.
This Court has already found that E.P. was petitioner’s qualifying child. At
trial petitioner credibly testified that E.P. had a mental disability and that he lived
with her for more than half of 2008. Therefore, E.P. was a qualifying individual
for petitioner for purposes of section 21.
Although petitioner credibly testified that she paid E.P.’s tuition, she does
not remember how much she paid. She also did not introduce any records that
established the amount she paid in 2008. Since petitioner did not substantiate her
claim through records or testimony, she is not entitled to the child care credit.
V. Child Tax Credit
The child tax credit is described in section 24, which provides that a
taxpayer may claim a credit against Federal income tax of up to $1,000 for each
qualifying child of the taxpayer. Sec. 24(a). For purposes of section 24(a) the
term “qualifying child” means a qualifying child of the taxpayer, as defined in
section 152(c). A qualifying child for purposes of section 24 is a “qualifying
child” as defined in section 152(c) who has not attained the age of 17. Sec.
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24(c)(1). Section 24(c) also requires that the individual be a U.S. resident. Sec.
24(c)(2).
The Court has found that E.P. was petitioner’s qualifying child for 2008,
E.P. was under the age of 17 in 2008, and the fact that E.P. was a U.S. resident is
not in dispute. Therefore, petitioner is entitled to a child tax credit for 2008. See
sec. 24.
Accordingly, petitioner is not entitled to the child care credit but is entitled
to the dependency exemption deduction, head of household filing status, and the
child tax credit for 2008.
To reflect the foregoing,
Decision will be entered
under Rule 155.