1 Unless otherwise indicated, all subsequent section

references are to the Internal Revenue Code in effect for 2000,

the taxable year in issue, and all Rule references are to the Tax

Court Rules of Practice and Procedure.

T.C. Summary Opinion 2005-189

UNITED STATES TAX COURT

RICHARD J. SARNI AND SUSAN SARNI, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 23540-04S. Filed December 29, 2005.

Richard J. Sarni and Susan Sarni, pro sese.

Jamie J. Song, 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 The decision to be entered

is not reviewable by any other court, and this opinion should not

be cited as authority.
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2 We use initials for a minor child.

Respondent determined a deficiency in petitioners’ Federal

income tax for the taxable year 2000 of $920. Hereinafter

references to petitioners individually are to Mr. Sarni or Mrs.

Sarni.

The principal issues for decision are:

(1) Whether petitioners are entitled to a dependency

exemption deduction for Mrs. Sarni’s son, S.G.2 We hold that

they are not.

(2) Whether petitioners are entitled to a child tax credit

for S.G. We hold that they are not.

Background

The parties submitted this case fully stipulated pursuant to

Rule 122. The stipulation of facts and the accompanying exhibits

are incorporated herein by this reference.

At the time that the petition was filed, petitioners resided

in Europe.

Petitioners have been married since April 2000. Mr. Sarni

is a U.S. citizen, and Mrs. Sarni is a British citizen. S.G.,

who is a British citizen, is Mrs. Sarni’s son and Mr. Sarni’s

stepson. For the year in issue, S.G. was not Mr. Sarni’s legally

adopted son.
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3 We decide the issues in this case without regard to the

burden of proof under sec. 7491(a) because the issues are

essentially legal in nature.

During 2000, petitioners and S.G. resided in the Netherlands

due to Mr. Sarni’s employment with the U.S. Department of Defense.

On July 17, 2001, petitioners filed a Form 1040, U.S.

Individual Income Tax Return, for the taxable year 2000. On

their return, petitioners claimed a dependency exemption

deduction and a child tax credit for S.G.

On July 2, 2004, respondent issued a notice of deficiency to

petitioners in which respondent determined that petitioners are

not entitled to claim S.G. as a dependent because S.G. is not a

U.S. citizen. Consequently, respondent further determined that

petitioners are not entitled to a child tax credit for S.G.

Petitioners filed a petition with the Court. Paragraph 4 of

the petition states in pertinent part:

I claim reimbursement for travel to the United States

small claims court and my return journey to the

Netherlands. In addition, I claim all associated costs

pertaining to this case.

Discussion

Generally, the Commissioner’s determinations are presumed

correct, and the taxpayer bears the burden of proving that those

determinations are erroneous.3 Rule 142(a); Welch v. Helvering,

290 U.S. 111, 115 (1933).
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A. Dependency Exemption Deduction

A taxpayer may be entitled to claim a dependency exemption

deduction for each individual who qualifies as the taxpayer’s

dependent under sections 151 and 152. Secs. 151(a), (c), and

152. An individual must meet the following five tests in order

to qualify as a dependent of the taxpayer: (1) Support test; (2)

relationship or household test; (3) citizenship or residency

test; (4) gross income test; and (5) joint return test. Secs.

151 and 152.

As relevant herein, the citizenship or residency test

requires that the dependent be a U.S. citizen or national, or

resident of the United States, Canada, or Mexico at some time

during the calendar year in which the taxable year of the

taxpayer begins. Sec. 152(b)(3); sec. 1.152-2(a)(1), Income Tax

Regs.

On their 2000 return, petitioners claimed a dependency

exemption deduction for S.G. In the notice of deficiency,

respondent disallowed the exemption on the basis that S.G. failed

to qualify as a dependent under the citizenship or residency

test.

S.G. is not a U.S. citizen or national, or resident of the

United States, Canada, or Mexico. Rather, S.G. is a British

citizen. Moreover, petitioners and S.G. resided in the
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Netherlands during 2000. Therefore, S.G. fails the citizenship

or residency test under section 152(b)(3).

We hold that petitioners are not entitled to claim a

dependency exemption deduction for S.G. for 2000. Accordingly,

respondent’s determination on this issue is sustained.

B. Child Tax Credit

Section 24(a) provides that a taxpayer may claim a credit

for “each qualifying child”. A qualifying child is defined,

inter alia, as any individual if “the taxpayer is allowed a

deduction under section 151 with respect to such individual for

the taxable year”. Sec. 24(c)(1)(A).

For the reasons stated in paragraph A, supra p. 4,

petitioners may not claim a dependency exemption deduction for

S.G. under section 151. Therefore, they may not claim a child

tax credit for him. Respondent’s determination on this issue is

sustained.

C. Period of Assessment

Petitioners contend that respondent “delayed in notifying

petitioner that the dependency exemption for * * * [S.G.] for

taxable year 2000 was disallowed.” Petitioners appear to argue

that respondent issued the notice of deficiency beyond the

statute of limitations on assessment. See sec. 6501(a).

Generally, an income tax must be assessed within 3 years

after the applicable return is filed (whether or not such return

was filed on or after the date prescribed). Sec. 6501(a). The
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bar of the statute of limitations on assessment is an affirmative

defense, and the party raising it must specifically plead it and

carry the burden of proving its applicability. Rules 39, 142(a). 

If the taxpayer makes a prima facie case proving the filing date

of his or her income tax return and the expiration of the

statutory period prior to the mailing of the notice of

deficiency, the burden of going forward with the evidence shifts

to respondent. Robinson v. Commissioner, 57 T.C. 735, 737

(1972). The burden of proof, i.e., the burden of ultimate

persuasion, however, always remains with the party who pleads

that the assessment is barred by the statute of limitations. 

Adler v. Commissioner, 85 T.C. 535, 540 (1985).

On July 17, 2001, petitioners filed their 2000 return. On

July 2, 2004, respondent issued the notice of deficiency. If for

no other reason, because the notice of deficiency was issued

within 3 years of the date that the return was filed, respondent

issued the notice within the time prescribed under section

6501(a), and the statute of limitations is not a bar to

assessment. See sec. 6503(a)(1) (suspending the running of the

period of limitations because of the issuance of a notice of

deficiency and the commencement of an action for

redetermination).

D. Estoppel

Petitioners contend that respondent should be estopped from

denying petitioners’ claimed dependency exemption deduction for
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4 We note that petitioners’ return was prepared by a

Volunteer Income Tax Assistance program presumably operated at a

military installation.

S.G. because respondent’s employees provided erroneous advice to

petitioners concerning such deduction.

To constitute estoppel: (1) There must be false

representation or wrongful misleading silence; (2) the error must

originate in a statement of fact and not in an opinion or a

statement of law; (3) the person claiming the benefits of

estoppel must be ignorant of the true facts; and (4) that person

must be adversely affected by the acts or statements of the

person against whom an estoppel is claimed. Underwood v.

Commissioner, 63 T.C. 468, 477-478 (1975), affd. 535 F.2d 309

(5th Cir. 1976); see Dixon v. United States, 381 U.S. 68 (1965).

Although it is not entirely clear in the record from whom

petitioners received such advice or when petitioners received

such advice,4 assuming arguendo that such advice was given,

respondent is not bound by the erroneous, incorrect, or

incomplete advice of his agents. Dixon v. United States, supra;

Auto. Club of Mich. v. Commissioner, 353 U.S. 180 (1957); McGuire

v. Commissioner, 77 T.C. 765, 779-780 (1981). Therefore,

respondent is not estopped from denying petitioners’ claimed

dependency exemption deduction for S.G. in the instant case.

E. Reasonable Litigation or Administrative Costs

Petitioners filed a petition for redetermination of a

deficiency under section 6213(a). In the petition, petitioners
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5 Apart from the time and manner of making a claim for

reasonable litigation and administrative costs, we note that it

cannot be said that petitioners were the prevailing party, see

sec. 7430(a), (c)(4), because all of the issues in dispute were

decided in respondent’s favor.

also seek reimbursement for travel costs to “the United States

small claims court” and “all associated costs pertaining to this

case”.

As relevant herein, a petition for redetermination of

deficiency under section 6213(a) shall contain the assignments of

error and the relief sought by the taxpayer. Rule 34(b)(4), (6). 

A claim for reasonable litigation or administrative costs,

however, shall not be included in the petition in a deficiency

action. Rule 34(b)(8). Rather, as relevant herein, a taxpayer

who has substantially prevailed and who wishes to claim

reasonable litigation and administrative costs may file a motion

within 30 days after the service of a written opinion determining

the issues in the case. Rule 231(a); see sec. 7430(a).

By virtue of Rule 34(b)(8), petitioners’ claim for

reasonable litigation or administrative costs in their petition

is premature. See Rule 231(a). Accordingly, we do not consider

petitioners’ claim at this time.5
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Conclusion

Reviewed and adopted as the report of the Small Tax Case

Division.

To reflect our disposition of the disputed issues,

Decision will be entered

for respondent.