TAX COURT OPINION

Case: William E. Seymour
Docket Number: 4551-09S
Judge: Colvin
Opinion Type: bench
Filed: 05/14/2010
Pages: 10

UNITED STATES TAX COURT WASHINGTON , D .C . 20217 WILLIAM E . SEYMOUR, Petitioner , v . ) Docket No . 4551-09S 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 of the above case before Special Trial Judge Lewis R . Carluzzo at Miami, Florida, on April 23, 2010, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed) Lewis R . Carluzzo Special Trial Judge Dated : Washington, D .C . May 14, 2010 a MNY 18 2019 3 1 Bench Opinion by Special Trial Judge Lewis R . Carluzzo 2 William E . Seymour v . Commissioner Docket No . 4551-09S 3 April 23, 201 0 4 THE COURT : The Court has decided to render 5 oral findings of fact . and opinion in this case, an d 6 the following represents the Court' s oral findings of 7 fact and opinion . 8 This proceeding for the redetermination of a 9 deficiency is a Small Tax Case subject to the 10 provisions of section 7463 of the Internal Revenu e 11 Code of 1986 , as amended , and Rules 170 through 175, of 12 the Tax Court Rules of Practice and Procedure . 13 This bench opinion is made pursuant to the 14 authority granted by section 7459 ( b) of the Internal 15 Revenue Code of 1986 , as amended , and Rule 152 of the 16 Tax Court Rules of Practice and Procedure . Subsequent 17 section references contained in this bench opinion are 18 to sections of the Internal Revenue Code of 1986, as 19 amended , in effect for 2007 . Rule references are to 20 the Tax Court Rules of Practice and Procedure . 21 William E . Seymour appeared pro se . Tracey 22 B . Leibowitz appeared on behalf of respondent . 23 In a notice of deficiency dated December 1, 24 2008 , respondent determined a $5,355 deficiency i n 25 petitioner ' s 2007 Federal income tax . The issues for Heritage Reporting Corporatio n (202) 628-4888 4 1 decision are : (1 ) Whether petitioner is entitled to a 2 dependency exemption deduction for either of two of 3 his grandchildren , identified here by initials, W .W . 4 and A . J . ; (2) whether petitioner qualifies as a head 5 of household ; (3) whether petitioner is entitled to a 6 child tax credit , including an additional child tax 7 credit ; and (4 ) whether petitioner is entitled to an 8 earned income credit . 9 Some of the facts have been stipulated and 10 are so found . At the time the petition was filed, 11 petitioner resided in Miami, Florida . 12 Petitioner has been married to the sam e 13 individual for more than 50 years and was so married 14 as of the close of 2007 . He has ,two daughters and at 15 least two grandchildren . 16 During 2007 petitioner lived with his ) wife 17 in a rented apartment in Miami , Florida . He paid the 18 rent which varied during the year from $ 550 to $650 19 per month . From time to time during 2007, W .W . an d 20 A .J . lived in the apartment with petitioner and his 21 wife . Petitioner could not be precise on the total 22 time his grandchildren lived with him during 2007 but 23 estimated it to be between five and six months . 24 Petitioner was employed as a staff person at 25 a convention center during 2007' . His timely file d Heritage Reporting Corporation (202) 628-4888 5 1 2007 Federal income tax return shows his wages for 2 that year as $13,623 and the receipt of Socia l 3 Security benefits treated as not includable in his 4 income . See sec . 86 . No other income is reported on 5 his 2007 return . Among other things and as relevant 6 here, the income tax liability and refund shown o n 7 that return take into account : (1) the standard 8 deduction applicable to a head of household, (2 ) dependency exemption deductions for W .W . and A .J ., (3 ) 10 a child tax credit, as well as an additional child tax 11 credit computed by treating W .W . and A .J . each as a 12 qualifying child, and (4) an earned income credit 13 computed by treating W .W . and A .J . each as a 14 qualifying child . The return directs that the $5,598 15 refund claimed be directly deposited into,a checking 16 account maintained at a financial institution 17 identified by a bank routing number . The checking 18 account number that appears on the return apparently 19 is the checking account number of petitioner's account 20 at a Wachovia bank somewhere in the Miami area . The 21 bank routing number shown on the return, however , 22 relates to the Republic Bank & Trust Co . i n 23 Louisville, KY (Republic) . According 'to respondent's 24 records, the refund claimed on petitioner's 200 7 25 return was processed and paid to an account maintained Heritage Reporting Corporatio n (202) 628-4888 6 1 at Republic . According to petitioner, he has n o 2 connection with Republic , the refund has not bee n 3 deposited into his checking account at Wachovia, an d 4 he has never otherwise received the refund . 5 In the notice of deficiency that forms the 6 basis for this case , respondent : (1) Disallowed the 7 dependency exemption deductions claimed for W .W . and 8 A .J . ; (2) changed petitioner's filing status from hea d of household to single , adjusted the standard 10 deduction accordingly , and applied the income tax rate 11 attributable to that filing status ; (3) disallowed the 12 child tax credit , as well as the additional child tax 13 credit ; and (4 ) disallowed the earned income credit . 14 Respondent now points out that petitioner ' s proper 15 filing status for 2007 was as a married individual 16 filing a separate return . To the extent tha t 17 respondent bears any burden of proof on that point, 18 the evidence satisfies that burden . .19 Because petitioner was married as of the 20 close of 2007, little discussion ' is required with 21 respect to the issues regarding his entitlement to an 22 earned income credit , or his qualification as a head 23 of household . That being so, we 'll start with those 24 issues . 25 In general, and subject to various Heritage Reporting Corporation (202) 628-4888 7 1 conditions and limitations, an eligible individual is 2 entitled to an earned income credit . Sec . 32(a) . 3 However,, because petitioner was married as of the 4 close of 2007 and he did not file a joint Federa l income tax return with his spouse for that year, he is not entitled to one . (Other grounds exist for th e 7 denial of the earned income credit, but one i s 8 enough ) . See sec . 32(d) . Respondent's disallowance 9 of that credit is sustained . 10 Petitioner's marital status also denies him 11 head of household filing status . Among othe r 12 requirements, an individual qualifies as a head of 13 household, if and only if the individual ,is no t 14 married as of the close of the taxable year . See sec . 15 2(b)(1) . Petitioner was married as of the close o f 16 2007 ; he does not qualify as a head of household . 17 Petitioner's marital status plays no direct 18 role with respect to his ; entitlement to the dependency 19 exemption deductions here in dispute and we consider 20 that issue next . 21 In general, a taxpayer is entitled to an 22 additional exemption deduction for each individual who 23 is a dependent of the taxpayer for the taxable year . 24 Sec . 151(a), (c) . Ignoring exceptions not relevan t 25 here, the term "dependent" as used in section 151 and Heritage Reporting Corporatio n (202) 628-4888 1 elsewhere in the Internal Revenue Code , means th e 2 taxpayer's qualifying child or a qualifying . relative . 3 Sec . 152(a) . 4 Subject to special rules not relevant here, 5 the term "qualifying child" includes, among othe r 6 relationships, a grandchild of the taxpayer who (1 ) 7 has the same principal place of abode as the taxpayer 8 for more than one half of the year, (2) meets certain 9 age requirements , and (3 ) has not provided over on e 10 half of his or her own support for the taxable year . 11 Sec . 152(c ) . These requirements can be loosely stated 12 as the relationship test , the residency test, the age 13 test , and the support test . The requirements are in 14 the conjunctive and all must be satisfied . 15 Petitioner candidly admitted that W .W . and 16 A .J . did not live with him and his wife for more than 17 one half of 2007, consequently neither fits within the 18 definition of petitioner's qualifying child unde r 19 section 152(c ) . Furthermore , ' because it cannot b e 20 determined whether W . W . or A .J . may be treated as the 21 qualifying child of another taxpayer, and the source 22 and extent of the support of either one of them is not 23 established , neither W . W . not A . J . may be treated as 24 petitioner's qualifying relative under section 152(d) . 25 See specifically section 152 ( d) (1) (C) and (D) . I t Heritage Reporting Corporation (202) 628-4888 1 follows that petitioner is not entitled to a 2 dependency exemption deduction for either of them fo r I 9 3 2007 and respondent ' s disallowances of those 4 deductions are sustained . 5 Next we turn our attention to the child tax 6 credit and note that our resolution of petitioner' s 7 entitlement to the dependency exemption deductions in 8 effect resolves this issue as well . 9 In general and subject to various conditions 10 and limitations, a taxpayer is entitled to a child tax 11 credit (including an additional child tax credit) with 12 respect to each qualifying child of the taxpayer . 13 Sec . 24(a) . The term "qualifying child" as used in 14 section 24 means an individual who has not attained 15 the age of 17, and who otherwise fits within th e 16 definition of a qualifying child as defined in section 17 152(c) . Sec . 24 (c) . 18 Petitioner treated both W .W . and A .J . as a 19 qualifying child for purposes of the child tax credit . 20 As discussed above, neither,of them fit within th e 21 definition of petitioner''s qualifying child unde r 22 section 152(c) . Therefore neither of them fit within 23 the definition of a qualifying child for purposes of 24 section 24 . It follows that petitioner is no t 25 entitled to the child tax credit or additional child Heritage Reporting Corporatio n (202) 628-4888 1 0 1 tax credit claimed on his 2007 return because he does 2 not have a qualifying child for purposes of tha t 3 credit . Respondent ' s disallowances of those credits 4 are sustained . 5 From petitioner ' s presentation at trial it 6 would not surprise us to learn that petitioner, more 7 or less , expected the issues to be resolved a s 8 discussed above . Much of the trial was devote d towards the status of his refund . There is a 10 technical question regarding how for deficienc y 11 purposes a refund wholly or partly attributable to the 12 denial of a claimed child tax credit and /or the earned 13 income credit should be treated if the refund, or a 14 portion of it is never received by the taxpayer . 15 Because section 6211 speaks in terms of credits 16 claimed , however , rather than credits refunded , 17 whether petitioner actually or constructively received 18 the refund does not affect the determination of th e 19 deficiency . Nevertheless , the status of the refund 20 claimed on petitioner ' s 2007 return , no doubt i s 21 important to him and he is entitled to know what 22 happened to it . 23 Apparently up until the time of trial 24 petitioner was not aware that the refund had been made 25 and respondent ' s counsel was not aware that he had not Heritage Reporting Corporatio n (202) . 628-4888 4 11 1 received it . Neither petitioner nor respondent' s 2 counsel had the opportunity to research the problem to 3 determine . exactly where the direct deposit was made , 4 and if erroneously made, how it could be recovered . 5 To allow both of them the opportunity to investigate 6 the matter, and to allow for either to move t o 7 supplement the record if necessary, the Court wil l 8 delay the entry of decision in this case for a period 9 of thirty days beyond the date that the transcript of 10 this bench opinion is served upon them . Otherwise, 11 To reflect the foregoing, decision will b e 12 entered for respondent . 13 This concludes the,Court's oral findings of 14 fact and opinion in this case . 15 (Whereupon, at 9 :55 a .m ., the bench opinion 16 in the above-entitled matter was concluded . ) 17 18 19 2 0 21 2 2 23 2 4 25 Heritage Reporting Corporation (202) 628-4888