TAX COURT OPINION

Case: William J. Burlison
Docket Number: 11964-14S
Judge: Carluzzo
Opinion Type: bench
Filed: 05/04/2015
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 WILLIAM J. BURLISON, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent. SD ) ) ) ) ) Docket No. 11964-14S ) ) ) ) ORDER Pursuant to the determination of the Court as set forth in its bench opinion rendered on April 21, 2015, it is 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 Special Trial Judge Lewis R. Carluzzo at Cheyenne, Wyoming, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. May 4, 2015 SERVED May 05 2015 Capital Reporting Company 1 Bench Opinion by Special Trial Judge Lewis R. Carluzzo 3 2 April 21, 2015 3 William J. Burlison v. Commissioner 4 5 Docket No. 11964-14S THE COURT: The Court has decided to render 6 Oral Findings of Fact and Opinion in this case and 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the following represents the Court's Oral Findings of Fact and Opinion (bench opinion). Section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, and Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 and Rules 170 through 175. Pursuant to section 7463(b), the decision entered in this case shall not be treated as precedent for any other case. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority. William J. Burlison appeared on his own behalf. Michael W. Lloyd appeared on behalf of Respondent. In a Notice of Deficiency dated 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 February 18, 2014 (notice), Respondent determined a $4,730 deficiency in Petitioner's 2012 Federal income tax. Most of the deficiency is attributable to the disallowance of credits claimed on Petitioner's timely filed 2012 Federal income tax return (return). The issues for decision are: (1) Whether 7 Petitioner is entitled to an exemption deduction for 8 9 10 11 12 13 14 15 either of two individuals shown as dependents on his return; (2) whether Petitioner qualifies as a head of household; (3) whether Petitioner is entitled to a child tax credit (including an additional child tax credit); and (4) whether Petitioner is entitled to an earned income credit. Some of the facts have been stipulated and are so found. At the time the petition was filed, 16 Petitioner resided in Wyoming. 17 18 As relevant here, during 2012 Petitioner's household consisted of himself, Amy King, AMK (Amy 19 King's daughter), and for at least a portion of the 20 year, Amy King's father. Of the four individuals, 21 Petitioner was the only one employed during that 22 23 24 25 year. Although Petitioner is not related to either Amy King or AMK, he provided much, if not all, of their support during 2012. The standard deduction claimed on 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 Petitioner's return reflects his claimed filing 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 status as a head of household. As relevant here, on his return Petitioner: (1) claimed dependency exemption deductions for Amy King and AMK; and (2) treated AMK as his qualifying child for purposes of the child tax credit and earned income credit. In the Notice, Respondent: (1) disallowed the dependency exemption deductions claimed for both Amy King and AMK; (2) changed Petitioner's filing status from head of household to single and adjusted the standard deduction accordingly, (3) disallowed the child tax credit (including the additional child tax credit) claimed on the return; and (4) disallowed the earned income credit claimed on the return. We first focus on the dependency exemption deductions here in dispute. In general, a taxpayer is entitled to an additional exemption deduction for each individual who is a dependent of the taxpayer for the taxable year. Sec. 151(a), (c). Ignoring exceptions not relevant here, the term "dependent" as used in section 151 and elsewhere in the Internal Revenue Code, means the taxpayer's qualifying child or a qualifying relative. See Sec. 152(a). Subject to special rules not relevant here 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and in addition to other requirements, the term "qualifying child" includes, an individual who is a "child of the taxpayer, or a descendant of such child" or "a brother, sister, stepbrother, stepsister of the taxpayer or a descendant of any such relative." See Section 152(c)(2). Petitioner acknowledges that he bears neither a genetic nor legal relationship with either Amy King or AMK that fits within the above categories of relatives. That being so, neither Amy King nor AMK may be treated as Petitioner's qualifying child. AMK, however, does fit within the definition of a qualifying child with respect to Amy King. A taxpayer is entitled to a dependency exemption deduction not only for the taxpayer's qualifying child but for the taxpayer's qualifying relative as well. Section 152(d) sets forth various conditions that must be satisfied in order for a taxpayer to treat another individual as his or her qualifying relative. In this case, the Court is satisfied that Amy King satisfies those requirements. Consequently, Amy King may be treated as Petitioner's qualifying relative for 2012, and Petitioner is entitled to a dependency exemption deduction for her for that year 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 on that ground. See section 152(d)(2)(H). Because AMK is Amy King's qualifying child, AMK cannot be treated as Petitioner's qualifying relative and Petitioner is not entitled to a dependency exemption deduction for AMK. See section 152(d)(1)(D). The above findings effectively resolve all other issues in this case. Because Petitioner is entitled to a dependency exemption deduction for Amy King, he qualifies as a head of household for 2012. See section 2(b). Furthermore, because for the reasons discussed above, neither Amy King nor AMK fits within the section 152(c) definition of Petitioner's qualify child, neither may be treated as his qualifying child for purposes of the child tax credit or the earned income tax credit. See sections 24(c)(1) and 32(c)(A). A taxpayer, of course, may be eligible for an earned income credit without a qualifying child. See section 32(c) (1) (A)(ii). In this case, 22 Petitioner's income during 2012 effectively denies 23 24 25 him entitlement to one. It follows that Respondent's disallowances of the child tax credit (including the additional child tax credit) and the earned income 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 credit are sustained. To reflect the foregoing, and Petitioner's concession of an item of income not discussed in this bench opinion, decision will be entered under Rule 155. This concludes the Court's Oral Findings of Fact and Opinion in this case. (Whereupon, at 9:15 a.m., the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com