TAX COURT OPINION

Case: Javon Marion
Docket Number: 14965-09S
Judge: Colvin
Opinion Type: bench
Filed: 07/02/2010
Pages: 10

UNITED STATES TAX COUR T WASHINGTON , DC 2021 7 JAVON MARION, Petitioner v . ) Docket No . 14965-095 . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge L . Paige Marvel at Memphis, Tennessee, on June 24, 2010, containing her oral findings of fact and opinion rendered at the conclusion of the trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed ) L. Paige Marvel Judg e Dated : Washington, D .C . July 2, 2010 SERVED JUL - 6 2010 3 1 Bench Opinion by Judge L . Paige Marvel June 24, 201 0 2 Javon Marion v . Commissioner Docket No . 14965-09S 3 THE COURT : THE COURT HAS DECIDED TO RENDER 4 ORAL FINDINGS OF FACT AND OPINION IN THIS CASE, AN D 5 THE FOLLOWING REPRESENTS THE COURT'S ORAL FINDINGS OF 6 FACT AND OPINION . THE ORAL FINDINGS OF FACT AN D 7 OPINION (HEREINAFTER BENCH OPINION ) SHALL NOT BE 8 RELIED UPON AS PRECEDENT IN ANY OTHER CASE . 9 This case was heard pursuant to sectio n 10 7463, Internal Revenue Code , in effect at the time the 11 petition was filed . Pursuant to section 7463 ( b), the 12 decision to be entered is not reviewable by any court . 13 This Bench Opinion is rendered pursuant to 14 section 7459 ( b), Internal Revenue Code , and Rule 152, 15 Tax Court Rules of Practice and Procedure . Unles s 16 otherwise indicated , all section references are to the 17 Internal Revenue Code in effect for the relevan t 18 period , and all Rule references are to the Tax Court 19 Rules of Practice and Procedure . 20 By statutory notice of deficiency dated 21 March 16 , 2009, respondent determined an income tax 22 deficiency of $4,261, with respect to petitioner's 23 2007 taxable year . Petitioner timely conteste d 24 respondent's determination by filing a petition in 25 this Court . On the date petitioner filed hi s Heritage Reporting Corporation (202) 628-4888 4 1 petition, he resided in Tennessee . 2 The issues for decision are : (1) Whether 3 petitioner is entitled to claim dependency exemptions 4 for his niece and nephew, both of whom were minors in 5 2007 ; (2) whether petitioner is entitled to claim head 6 of household filing status for 2007 ; and (3) whethe r 7 petitioner is entitled to the earned income tax credit 8 (EITC) for his niece and nephew for 2007 . Respondent 9 concedes that petitioner is entitled to an EITC o f 10 $177 for 2007, but respondent asserts that petitioner 11 may not claim the EITC for his niece and nephew . 12 A trial was held on June 21, 2010, in 13 Memphis, TN, at which petitioner testified . 14 Respondent was represented by Amber N . Becton . 15 FINDINGS OF FACT 16 Some of the relevant facts have bee n 17 stipulated . The stipulation of facts is incorporated 18 herein by this reference . 19 Petitioner, a single taxpayer, filed a 20 timely Federal income tax return for 2007 . On that 21 return petitioner claimed dependency exemptio n 22 deductions for C .L .R ., his nephew, and E .R .R ., his 23 niece, and asserted that both children, who were 24 minors during 2007, were his qualifying children . 25 Petitioner filed his 2007 return claiming head o f Heritage Reporting Corporation (202) 628-4888 5 1 household status and the EITC for himself and his 2 niece and nephew (collectively the children) . 3 During 2007 petitioner was enrolled full 4 time at an institution of higher learning . I n 5 addition, he worked for several employers and earned 6 wages of $10,267, which he reported on his 200 7 7 return . 8 The children that petitioner claimed a s 9 dependents during 2007 are the biological children of 10 his sister, who resided with her (and petitioner's) 11 mother throughout 2007 . During 2007 both of the 12 children were under the age of 5 years old an d 13 attended daycare for an unspecified period of time . 14 The cost of the daycare was covered by the Tennessee 15 Child Care Assistance Program and was not paid by 16 petitioner . 17 Petitioner had an account in his name with 18 the Memphis Light, Gas and Water Division during 2007, 19 but the account statements in the record reflected 20 that the account was overdue . Statements with respect 21 to certain insurance coverage for the children during 22 2007 were mailed in care of petitioner but reflected 23 that the insurance had lapsed due to nonpayment . 24 Petitioner did not introduce any checks or other 25 records to establish the total amount of th e Heritage Reporting Corporation (202) 628-4888 6 1 children's support for 2007 or the portion of the 2 children's support, if any, that petitioner paid 3 during 2007 . 4 Petitioner did not call the children' s 5 mother, Shavon Washington Reed (also known as Shavon 6 Nicole Reed), or their grandmother, Bertha Humes, to 7 testify at trial . Petitioner did produce a letter, 8 purportedly from Ms . Reed, which states that th e 9 children . lived with petitioner for 2007 and that "He 10 paid all living expenses", but the letter is imprecise 11 and ambiguous regarding whose living expense s 12 petitioner paid . In addition, we do not find th e 13 letter credible or convincing under the circumstances 14 of this case . 15 DISCUSSION 16 The deficiency determined by th e 17 Commissioner in the notice of deficiency is presumed 18 correct, and ordinarily the taxpayer has the burden of 19 proving that the notice of deficiency is erroneous . 20 Rule 142 ; Welch v . Helvering , 290 U .S . 111, 11 5 21 (1933) . Under section 7491, the burden of proof may 22 shift to the Commissioner but only if the taxpayer 23 satisfies all of the section 7491 requirements . 24 Petitioner has not done so in this case and therefore 25 bears the burden of convincing the Court tha t Heritage Reporting Corporation (202) 628-4888 7 1 respondent erred by disallowing the dependenc y 2 exemption deductions and the EITC for the children and 3 by rejecting petitioner's head of household filing 4 status . We turn now to the issues for decision 5 Dependency Exemption Deduction s 6 Section 151(c) permits a taxpayer to deduct 7 an exemption for each dependent as that term i s 8 defined under section 152, Section 152 provides that a LJVM 9 dependent must either be a qualifying child or a 10 qualifying relative . 11 Section 152(c)(1) defines a qualifying child 12 as a child who bears a specified relationship to the 13 taxpayer, who lived with the taxpayer for more than 14 one-half of the tax year at issue, and who did not 15 provide more than one-half of his or her own support 16 during the tax year . A .qualifying child must either 17 be less than 19 years old or a student who is less 18 than 24 years old, or permanently and totall y 19 disabled . Sec . 152(c)(3) . In short, the taxpayer 20 must show that the child satisfies both the age and 21 relationship requirements, the residency requirement, 22 and the support requirement of section 152(c)(1) and 23 (3) for the child to be the taxpayer's qualifyin g 24 child for a particular taxable year . 25 Respondent does not dispute that the .-Heritage Reporting Corporation (202) 628-4888 8 1 children bear a qualifying relationship to petitioner 2 and meet the age requirement under section 152(c) . 3 However, respondent contends that petitioner has not 4 established that the support and residenc y 5 requirements of section 152(c) have been satisfied . 6 We agree . 7 The record made at trial does not enable 8 this Court to calculate the total amount of support 9 furnished to the children during 2007, nor does it 10 permit the Court to ascertain how much of th e 11 children's support was actually furnished by 12 petitioner . The few documents in the record suggest 13 that petitioner was having problems meeting hi s 14 financial obligations during 2007, and they do not 15 permit the Court to find that petitioner paid an y 16 bills related to the children during 2007 . Moreover, 17 because of the very young age of the children, the 18 Court does not find credible petitioner's testimony 19 that the children were living with him throughout 200 7 20 and were not spending most of the time with their 21 mother and grandmother, who were living together 22 during 2007 . Petitioner was a full-time student 23 during 2007 who also worked several part-time jobs . 24 Such a schedule does not leave much time to take care 25 of toddlers . The Court is simply not convinced tha t Heritage Reporting Corporation (202) 628-4888 1 petitioner maintained a household for the children and 2 provided the necessary level of support for the m 3 during 2007 . Consequently, we sustain respondent's 4 determination that petitioner is not entitled t o 5 dependency exemption deductions with respect to the 6 children . 7 Head of Household Filing Statu s 8 In order to qualify for head of household 9 filing status under section 2(b), a taxpayer mus t 10 satisfy the following requirements : (1) The taxpayer 11 must not be married at the close of the taxable year 12 or be a surviving spouse for that year ; (2) the 13 taxpayer must maintain as his home a household that 14 constitutes the principal place of abode of a 15 qualifying child within the meaning of section 152(c) 16 or of any other person who is a dependent of th e 17 taxpayer under section 151 ; and (3) the taxpayer must 18 furnish over half the cost of maintaining th e 19 household during the relevant taxable year . The cost 20 of maintaining the household includes expense s 21 incurred for the mutual benefit of the persons living 22 in the household such as rent or mortgage payments, 23 property taxes, property insurance, utility charges, 24 upkeep and repairs, and food consumed on the premises . 25 Sec . 1 .2-2(d), Income Tax Regs . Heritage Reporting Corporation (202) 628-4888 1 0 1 Petitioner has failed to demonstrate by 2 sufficient credible evidence that he maintained a 3 household that was also the principal place of abode 4 of the children during any part of 2007 . Petitione r 5 did not offer any checks, receipts, invoices, or other 6 documentation to show that he actually made an y 7 payments to maintain the household, and he did not 8 prove that the children resided in the home for the 9 required period during 2007 . Consequently, we sustain 10 respondent's determination that petitioner is no t 11 entitled to head of household filing status for 12 2007 . 13 Earned Income Tax Credi t 14 Section 32 permits taxpayers with low earned 15 income who qualify as "eligible individuals" to claim 16 a tax credit . An eligible individual is (a) a person 17 who has a "qualifying child", or (b) a person between 18 the ages of 25 and 65 who resided in the United States 19 for more than half the taxable year and who was not a 20 dependent for whom a dependency exemption deduction is 21 allowed to another taxpayer . Sec . 32(c)(1)(A) . The 22 term "qualifying child" has the same meaning fo r 23 purposes of both section 152(c) and section 32 . Sec . 24 32(c)(3) . 25 As we explained earlier, petitioner has no t Heritage Reporting Corporation (202) 628-4888 1 proven that the children were his qualifying childre n 2 during 2007 . Consequently we sustain respondent' s 3 determination disallowing the EITC with respect to the 11 4 children . 5 CONCLUSION 6 Petitioner has failed to prove that he is 7 entitled to the dependency exemption deductions with 8 respect to his niece and nephew for 2007 . I n 9 addition, he has failed to convince the Court that he 10 maintained a household that constituted the principal 11 place of abode of his niece and nephew during any part 12 of 2007 . Finally, petitioner has failed to establish 13 that his niece and nephew were qualifying children for 14 purposes of section 32, which allows an earned income 15 tax credit under certain circumstances . Consequently, 16 decision will be entered for respondent . 17 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF 18 FACT AND OPINION IN THIS CASE . 19 (Whereupon, at 3 :50 p .m ., the bench opinion 20 in the above-entitled matter was concluded . ) 21 22 23 24 / / 25 Heritage Reporting Corporation (202) 628-4888