TAX COURT OPINION

Case: Diana T. Kristinat
Docket Number: 5256-12S
Judge: Dean
Opinion Type: bench
Filed: 06/10/2013
Pages: 11

UNITED STATES TAX COURT WASHINGTON, DC 20217 DIANA T. KRISTINAT, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket No. 5256-12S. Pursuant to Rule 152 (b) , Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith the to petitioner and to respondent a copy of transcript of Judge John F. Dean at San Diego, California, containing oral findings of which the case was heard. the trial in the above case before Special Trial the pages of fact and opinion rendered at the trial session at In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) John F. Dean Special Trial Judge Dated: Washington, D.C. June 10, 2013 Capital Reporting Company Bench Opinion by Special Trial Judge John F. Dean 3 May 14, 2013 Diana T. Kristinat v. Commissioner Docket No. 5256-12S THE COURT: The Court decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion. In this bench opinion, all section numbers refer to the Internal Revenue Code in effect for the taxable year at issue, and all rule references are to the Tax Court Rules of Practice and Procedure. This proceeding was heard as a Small Tax Case pursuant to the provisions of section 7463, and Rules 170 through 179. Respondent determined a deficiency in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Petitioner's Federal income tax in the amount of 18 19 $2,807 for the taxable year 2008. The issues for decision are whether 20 Petitioner: is entitled to a deduction for a 21 22 23 24 25 dependency exemption for her daughter, A.K.; the child tax credit; the earned income credit; and to file as head of household. Background The stipulated facts and exhibits are 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 incorporated herein by reference. Petitioner resided in California at the time the petition in this case was filed. During 2008, Petitioner and her husband separated and began the divorce process. Petitioner vacated the marital residence as of August 8, 2008. Petitioner and her husband, Mr. Kristinat, were the parents of A.K. On June 19, 2008, the Superior Court of California, for the County of 10 Orange, granted joint custody of their child to 11 Petitioner and Mr. Kristinat, with physical custody 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to be with Mr. Kristinat. Petitioner was to have contact with the child on the second and fourth weekends of the month and on Wednesdays. Mr. Kristinat claimed A.K. as his dependent for 2008. Petitioner filed her Federal income tax return for 2008 as head of household (with qualifying person), claimed her daughter as her dependent, and claimed the earned income and child tax credits. No Form 8832, Release of Claim to Exemption for Child of Divorced or Separated Parents, was attached to Petitioner's Federal income tax return for 2008, nor was there a document attached containing a signed waiver by the custodial parent containing an unconditional declaration that he would 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 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 not claim the child as a dependent for 2008. Discussion In general, Respondent's determinations as set forth in a notice of deficiency are presumed correct. Welch v. Helvering, 290 U.S. 111, 115 (1933). In pertinent part, Rule 142 (a)(1) provides the general rule that the burden of proof shall be upon the taxpayer. In certain circumstances, however, if the taxpayer introduced credible evidence with respect to any factual issue relevant to ascertaining the proper tax liability, section 7491 shifts the burden of proof to the Commissioner. Sec. 7491(a)(1); Rule 142 (a)(2). Petitioner does not argue that Section 7941 is applicable in this case, and she has not established that the burden of proof should shift to Respondent. Petitioner, therefore, bears the burden of proving that Respondent's determinations in the statutory notice of deficiency are erroneous. See Rule 142(a); Welch v. Helvering, supra at 115. Dependency Exemption Section 151 allows deductions for personal exemptions, including exemptions for dependents of the taxpayer. See sec. 151(c). Section 152(a) defines the term "dependent" to include a "qualifying relative" or a "qualifying child" who is a son or 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 daughter of the taxpayer who has the same principal place of abode as the taxpayer for more than one half of the taxable year. Section 152(c)(4) provides that if a qualifying child is claimed by both parents who do not file a joint Federal income tax return, the child is the qualifying child of the parent having custody of the child for a greater portion of the year, and is entitled to claim the dependency exemption deduction for that child. The record in this case shows that Mr. 12 Kristinat was the custodial parent and the parent 13 14 15 16 17 18 19 20 21 22 23 24 25 having custody for a greater portion of the year. But there is an exception where the custodial parent has validly executed a written release of his or her right to claim the dependency exemption deduction. Section 152 (e)(2). Temporary regulations promulgated with respect to section 152 (e)(2) provide that a non- custodial parent may claim the exemption for a dependent child only if the non-custodial parent attaches to his or her income tax return for the year of the exemption a written declaration from the custodial parent stating that he or she will not claim the child as a dependent for the taxable year 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 beginning in such calendar year. Sec. 1.152-4T(a), Q & A-3, Temporary Income Tax Regs., 49 Fed.Reg. 34459 (Aug. 31, 1984); see also Miller v. Commissioner, 114 T.C. 184, 188-189 (2000), aff'd on another ground sub nom. Lovejoy v. Commissioner, 293 F.3d 1208 (10th Cir. 2002). Temporary regulations are entitled to the same weight as final regulations. See Peterson Marital Trust v. Commissioner, 102 T.C. 790, 797 (1994), aff'd 78 F.3d 795 (2d Cir. 1996); Truck & Equip. Corp. v. Commissioner, 98 T.C. 141, 149 (1992). The declaration required under section 142 (e)(2) must be either on a completed Form 8332 or on a statement conforming to the substance of Form 8332. 15 Miller v. Commissioner, supra at 189; Brissett v. 16 17 18 19 20 21 22 23 24 25 Commissioner, T.C. Memo. 2003-310. Form 8332 requires a taxpayer to furnish: (1) the names of the children for which exemption claims were released; (2) the years for which the claims were released; (3) the signature of the custodial parent confirming his or her consent; (4) the Social Security number of the custodial parent; (5) the date of the custodial parent's signature; and (6) the name and Social Security number of the parent claiming the exemption. Miller 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 v. Commissioner, supra at 190. Petitioner did not attached a Form 8332 to her return for 2008, or any other document that would qualify as a statement conforming to the substance of Form 8332. Therefore, Petitioner cannot claim her daughter as a dependent for 2008. Also, Petitioner cannot claim her daughter as a qualifying relative because A.K. is the qualifying child of another taxpayer, Mr. Kristinat, 10 for the taxable year. See sec. 152(d)(1)(D). 11 Child Tax Credit 12 With respect to the child tax credit 13 Petitioner claimed for 2008, section 24 (a) authorizes 14 15 16 17 18 19 20 21 22 23 24 25 a child tax credit with respect to each "qualifying child" of the taxpayer. The term "qualifying child" is defined in section 24 (c). A "qualifying child" means an individual with respect to whom the taxpayer is a qualifying child under section 152(c) who has not attained the age of 17 as of the close of the taxable year. Since Petitioner did not have a qualifying child under section 152, it follows that, for the year at issue, Petitioner is not entitled to claim a child tax credit. Earned Income Credit 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 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 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 2008. Respondent's determination on this issue is sustained. Section 32 (a)(1), however, potentially allows an "eligible individual" the earned income credit against that individual's income tax liability 17 without a qualifying child. Section 32 (a)(2) provides 18 19 20 21 22 23 24 25 limitations on the amount of the allowable credit based on certain percentages and amounts (as determined by section 32 (b) ) . Individuals without a qualifying child, as is Petitioner's case, may be eligible for the earned income credit if their earned income is no greater than the "phaseout" amount the Code permits. Sec. 32 (a)(1), (a)(2)(B) and (j)(1); see Rowe v. Commissioner, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 128 T.C. 13, 15 (2007). Earned income for purposes of the earned income credit includes wages and net earnings from self-employment. Section 32(c)(2); sec. 1.32-2(c)(2), Income Tax Regs. Rev. Proc. 2007-66, sec. 3.07, 2007-2 C.B. 970, 973, lists the amount used to determine the earned income credit for 2008 under section 32(b). The revenue procedure lists the completed phaseout as $12,880 for an individual with no qualifying children. Id. The "completed phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) at or above which no credit is allowed. Id. Petitioner's adjusted gross and earned income for 2008 was $29,477. Petitioner's adjusted gross income and earned income both exceeded the phaseout amount of $12,880 for 2008. Accordingly, she is ineligible to claim the earned income credit under 32(c)(1)(A)(ii) as an individual without a qualifying child for 2008. Head of Household In the notice of deficiency, Respondent determined Petitioner's proper filing status to be single and not head of household. Section 1(b) imposes a special tax rate on individuals filing as 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 Capital Reporting Company 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 head of house hold. "Head of household" is defined in section 2 (b) as an individual who was not married at the close of the taxable year who maintained as his home a household which constitutes for more than one half of the taxable year the principal place of abode for a qualifying child of the individual. Sec. 2b)(1)(A)(i). Petitioner has not shown under section 7703(a)(2) that she was not married at the end of the taxable year, and the Court has found that she no qualifying children. Therefore, Respondent's determination on this issue is sustained. CONCLUSION Respondent's determinations to deny 15 Petitioner a dependency exemption deduction for A.K., 16 to deny Petitioner the child tax credit, to deny 17 Petitioner the earned income credit for 2008, and to 18 19 20 21 22 23 24 25 change Petitioner's filing status from head of household to single are sustained. To reflect the foregoing, The Court will enter decision for Respondent. This concludes the Court's oral findings of fact and opinion in this case, and also the Court's trial session in San Diego. Thank you. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 (Whereupon, at 2:22 p.m., the above-entitled 2 matter was concluded.) 3 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