TAX COURT OPINION

Case: Matthew Rice
Docket Number: 26356-07S
Judge: Gustafson
Opinion Type: summary
Filed: 05/28/2009
Pages: 11

T .C . Summary Opinion'2009-8 3 UNITED STATES TAX COURT MATTHEW RICE, Petitioner v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket No . 26356-07S . Filed May 28, 2009 . Matthew Rice, pro se . Michael T . Sargent , for respondent . GUSTAFSON, Judge : This case was heard pursuant to the provisions of section 74631 in effect when the petition was filed . Pursuant to section 7463(b), the decision to be entere d 'Unless otherwise indicated, all citations . of sections refer . to the Internal Revenue Code of 1986 (26 U .S .C .) in effect or ; the tax year at issue, and all citations of Rules refer to ~he Tax Court Rules of Practice and Procedure . 11 2 - is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case . The Internal Revenue Service (IRS) determined a $5,70 4 deficiency in petitioner Matthew Rice's 2006 Federal income tax . After respondent conceded several issues, he-recomputed the deficiency in Mr . Rice's 2006 Federal income tax to be $2,260 . The issues remaining for decision .are : (i) Whether Mr . Rice is entitled to claim his girlfriend's son as a qualifying child for purposes of the child tax credit under section 24(a) and the so- called additional child tax credit under section 24(d) ; and (ii) whether Mr . Rice is entitled to claim his girlfriend's so n as a qualifying child for purposes of the earned income tax credit under section 32(a)(1) . -Although we assume that, a s Mr . Rice testified, he did indeed care for his girlfriend's son during 2006 as if he were Mr . Rice's "stepson", Mr . Rice i s nonetheless not entitled to these tax,b .enefits because of the, facts proved at trial . II Some .of,the facts have been stipulated and are so found . Background The stipulation of facts filed December 9 ., 2008, and the attached exhibits are incorporated herein by this reference . At the-time that he filed his petition, Mr . Rice resided in South Carolina . - 3 - Mr . Rice's Relationship and Living Arrangements With His Girlfriend's So n During 2006 Mr . Rice lived in South Carolina at the sam e address with his mother ; his girlfriend, Linee Shawn Douglas hi s 2-year-old daughter, A R-R,2 who is also the daughter of Ms . Douglas ; and Ms . Douglas's 12-year-old son, A G-R . Mr . Rice i s the biological father of A R-R, but he is not the biological father of A G-R . Mr . Rice has not alleged, nor .does the .re c )rd' show, that he adopted A G-R or was otherwise related to him . Mr . Rice has not alleged, nor does the record show, that he was married to Ms . Douglas in 2006 . Mr . Rice's 2006 Form 104 0 Mr . Rice timely filed his 2006 Form 1040, U .S . Individual Income Tax Return . On that Form 1040 Mr . Rice claimed A R and A G-R as qualifying children for purposes of (i) head of household . filing status under section 2(b) ; (ii) the depend nc y exemption deduction under section 151(c) ; (iii) the child t x credit under section 24(a) and the additional child tax cre ~ it under section 24(d) ; and ( iv) the earned income tax credit ende r section 32(a)(1) . 2It is the .policy of this Court n6t .to identify minors .) We refer to Mr . Rice's daughter and his girlfriend's son by using their initials . See Rule 27(a)(3) . Notice of Deficienc y - 4 - On August 17, 2007, the IRS mailed Mr . Rice a statutory notice of deficiency for tax year 2006 that determined his prope r filing status to be single and disallowed the dependency - exemption deductions for A R-R'and A G-R, the child tax credi t and the additional child tax credit for A R-R and A G-R, and th e earned income tax credit . In response to the notice of deficiency, Mr . Rice timely filed a petition . A R-R's Birth Certificat e This case proceeded to trial on December 9, 2008, during which respondent did not concede Mr . Rice's paternity of A R-R . At the conclusion of the trial, we left the record open to allo w Mr . Rice a period of 60 days to further substantiate his , 11 paternity of A R-R with a copy of A R-R's birth certificat e issued by the State of South Carolina . On December 15, 2008, Mr . Rice provided. respondent with a copy of A R-R's birt h certificate, which clearly indicates that Mr . . Rice is the biological father of A R-R . Respondent's Concessions After trial and the receipt of a copy of A R-R's birth certificate, respondent conceded most of both the determined deficiency and the issues in this case . Respondent has conceded that for tax year 2006 Mr . Rice is entitled to (i) .file as head . of household under section-2(b), (ii) claim A R-R as a qualifying - 5 - child under section 152(c) and A G-R as a qualifying relative under section 152(d) for purposes of the dependency exemption deduction under section 151(c), (iii) claim A R-R as a qualifying child for purposes of the child tax credit under section 24(~ ) and the additional child tax credit under section 24(d), and (iv ) claim A R-R as a qualifying child for purposes of the earne d income tax credit .under section 32(a)(1) . To reflect those concessions, respondent recomputed Mr . Rice's deficiency on Form 4549, Income Tax Examination Chang s to be $2,260, rather than the $5,704 originally determined . Respondent notified Mr . Rice of the 'recomputation of the deficiency bya letter dated January 15, 2009, and a copy of ;thle Form 4549 . Respondent reports that Mr ."Ricehas indicated that! he disagrees with respondent's recomputation of the deficieny, l but Mr . Rice has made no objection to the Court . He did not f iile a posttrial brief, as the Court invited him (but did not re him) to do . We have reviewed respondent's recomputation on 4549 and found that it correctly determines, the deficiency respondent maintains, Mr . Rice is not entitled to claim his girlfriend' s son A G-R as a qualifying child for purposes o (i) the child tax credit and the additional child tax cred i section 24, and (ii) the earned income tax credit of section 3 6 - Discussion 1 . Burden of Proo f -Ge.nerally, ..the .Commissioner's determinations are presumed correct, and the taxpayer bears the burden of proving that .those determinations are erroneous . Rule 142(a) ; see also INDOPCO, Inc . v . Commissioner , 503 U .S . 79, 84 (1992) ; Welch v . Helvering , 290 U .S . 111, 115 (1933) . Deductions and credits are a .matter of legislative grace, and the, taxpayer bears the burden of proving that he is entitle d to any deduction or credit claimed .3 Rule 142(a) ; .see also Deputy v . du Pont , 308 U .S . 488, 493 (1940) ; New Colonial Ice Co . v . Helvering , 292 U .S . 435, 440 (1934) . Likewise, the taxpayer is obliged to demonstrate-entitlement to an advantageous filing status,-:.such as head of household . See Smith v . Commissioner , T . C-. ° Memo . 2008-229 . . , II . Qualifying Child Under Section 152(c ) Mr:. Rice's entitlement to claim A G-R as a "qualifying child" for purposes of the section 24 child tax credit (and the additional child tax credit) and the section .32 earned income ta x 3Under section 7491(a)(1), the burden of proof may shift from'the taxpayer to the Commissioner if the taxpayer produces credible evidence with respect to any factual issue relevant to ascertaining the taxpayer's tax liability . Mr . Rice has neither claimed nor shown that he satisfied the requirements of section,7491(a) to shift the burden of proof to respondent with respect to any factual issue . Mr . Rice therefore bears the burden of proof . See Rule 142(a)(1) . - 7 credit depends on whether A G-R is a "qualifying child" for purposes of section 152 (which relates to the dependency exemption deduction), because both credits define the term "qualifying child" with reference to the definition-of-the same term as . it appears in section 152(c) . We therefore examine i he status of A G-R as a "qualifying child" . under section 152(c) determine Mr . Rice's entitlement to the credits at issue . .Under section 152(c)~, a qualifying child is an individual who meets the following four .tests : Relationship test : The individual must be a child, ste'- child, or adopted child .of the taxpayer, descendant o f child of the taxpayer, a brother, sister, stepbrother, fo r stepsister of the taxpayer, or a descendant of any suc relative . Sec . 152 (c) (1) (A) , (2)", (f) (1) . (cid:127) Residence test : The individual must have the same pri cipal place of abode as the taxpayer for more than one-half f th e tax .year . Sec . 152(c)(1)(B ) (cid:127) Age test : The individual must be under the age of 19 r' a student under the age of 24 . Sec . 152(c) (1) (C) , (3) . (cid:127) Support test : The individual must not provide over o n of .his or her own support . . Sec . .152(c)(1)(D) . (cid:127) - 8 - Respondent concedes both the residence4 and supports, tests . for a qualifying child under section '152(c )- are met . ~ - ar Furthermore , the age-test is met . because A G-R . was 12 years ol d in 20 .06 . However, the first of these four tests--the relationship test-- .is not .met, because A G-R is not Mr . Rice's child within the meaning of section 152(c)(2)(A) . Mr . Rice i s not the biological father .of A G-R . Mr . Rice has not alleged, nor does the'record show, that he adopted .A .G-R or was otherwis e Section . 152 (d) (2) (A) - (H) lists eight types of . qualifying In his posttrial brief, respondent concedesthat'A'G-R is a ",qualifying relative " (emphasis added) of Mr . Rice under section 152(d) . relationships . to meet the relationship test for a qualifying relative, seven of which involve various familial relationships that do not cover A G-R, who was not shown to be Mr . Rice's child or otherwise related .to him . The eighth type of qualifying relationship applies to an individual, other than the taxpayer's spouse, who has the same principal place of abode as the taxpayer. and is a member of the taxpayer's household for the taxable year . Sec . ' 152(d)(2)'(H) In order for an individual to be considered a member of a taxpayer's household, the taxpayer must maintain the household, and both the taxpayer and the individual must''occupy the household for the "entire taxable year" . Sec . 1 .152-1(b), Income Tax Regs . (Emphasis added .) Since respondent concedes that A G-R is a qualifying relative under section 152(d) and meets the relationship test thereunder, it necessarily follows that he concedes that A G-R had, the same principal place ; of abode as Mr . Rice for all'of 2006, which exceeds the half-year requirement of the residence test for a "qualifying child" under section" 152 (c) (1) (B) . if SThe support test for a qualifying relative under section 152(d) .(1) (C) is more stringent than the support test for a qualifying child under section 152(c)(1)(D), and any individual who passes the former test also passes the latter . Therefore, since respondent concedes that A G-R is a qualifying relative under section 152(d) and meets the support test thereunder, it necessarily follows that he concedes that A G-R meets the less stringent support test for a qualifying child . 9 - related to him . Lastly, Mr .' Rice has not alleged, nor does he record show, that he was married in 2006 to the child's moth r , Ms . Douglas, and thus A G-R was riot his stepchild . Therefor A G-R is not'a qualifying child of Mr . Rice under section 1 5 for 2006 . III . Child Tax Credit and Additional Child Tax Credi t Section 24 ( a) allows 'a child tax .credit with respect to ea c h "qualifying child" .of the taxpayer . Section 24(d) provides ' ha t a portion of the credit may be refundable . That portion i s commonly-referred to as the additional child tax credit . qualifying child for purposes of section 24 is "a qualifying child of the taxpayer (as .defined in-section 152(c))' who has not. attained age 17 ." 'Sec . 24(c)(1) However, as we have previlousl y concluded, A G-R is not'a qualifying child of Mr . Rice unde section 152(c) . . Therefore, we hold that Mr . Rice is not en itled to .claim A G-R as a qualifying child for purposes of the child tax credit under section 24(a) and the additional child tax credit under section 24 ( d) for 2006 . Respondent ' s determin tion, as modified by his recomputation on Form 4549 , is sustained . IV . Earned Income Tax Credit . Section 32 ( a)(1) allows an eligible individual, like M Rice,6 an earned income tax credit against that individual' s 6Since respondent concedes that Mr .-Rice's daughter A -Ris a qualifying-child of Mr . Rice for purposes of the earned i'com e . :) (continu~d . t 10 - income tax liability . The,amount(cid:127)of'the credit is determined according to percentages that vary depending on whether the taxpayer has one qualifying child, two or more qualifying children, . or no qualifying children . Sec . . 32 (b)- . Those:, percentages increase if a taxpayer has two qualifying, children , as opposed to one or none . Id . Respondent has conceded tha t Mr . Rice has one qualifying child , A R-R, and Mr . Rice would b e entitled to a larger earned income tax credit if A G-R was a qualifying child . Under section 32 (c) (3) (A) , a qualifying child is defined-th e same .'ryas "a qualifying child of the ,taxpayer (as defined section 152(c)" .' However, as we have previously concluded , A G-R,is not a qualifying child of Mr . Rice under section 152(c), because he failed the relationship test thereunder . Therefore , Mr . Rice is not entitled to. claim A-G=R as a qualifying child fo r purposes of the earned income tax credit under section 32(a)(1) 6( continued) tax credit, it necessarily follows that Mr . Rice is an eligible individual under section 32(c)(1)(A)(i) . 7 The definition in section 32(c)(3 )(A) includes qualifications not important here . It defines a qualifying child as "a qualifying child of the taxpayer ( as defined in section 152(c)', determined without regard to paragraph ( 1)(D) thereof [th e support test ] and section 152(e ) [" Special Rule for Divorced Parents, Etc ."]) ." by theyrelationship , test, to which these qualifications do not pertain . As we explain in text, A G-R-is disqualified for 2006 . Respondent's determination, as modified by his - 1 1 recomputation on Form 4549, is sustained . To reflect the foregoing, An appropriate decision wil l be entered for respondent .