TAX COURT OPINION

Case: Dawnee Cochran
Docket Number: 22015-08S
Judge: Dean
Opinion Type: summary
Filed: 02/18/2010
Pages: 7

UNITED-STATES TAX COUR T DAWNEE COCHRAN, Petitioner v . COMMISSIONER OF INTERNAL' . REVENUE, Responden t DEAN,' Special Trial w Judcte .This case was ' heard pursuant t o the provisions of'section 7463 of the Internal Revenue Code'in ~ effect when the -petition was ' filed' . "~Pursuant to 'section 7463 (b) , the decision to be entered'is not reviewable by'any other court , and this opinion shall not be treated' as"precedent rforany=other case . '!Unl'ess 'otherwise indicated, °subsequent section reference s are tc the 'Internal ' Revenue ' Code (Code) in effect ~-f the year in SERVE' F 18 2010 - 2 - issue, and all Rule references are to the Tax Court Rules of Practice and Procedure . For 2007 respondent determined a deficiency of $4,608 in petitioner's Federal income tax . The issues for decision are whether petitioner : (1) Is entitled to dependency exemption deductions for her niece and nephew ; (2) is entitled to head of household filing status ; and (3) is entitled to an earned income tax credit . Background Some of the facts have been stipulated and are so found . The stipulation of facts and the attached exhibits are incorporated herein by reference . When petitioner filed her petition, she resided in Illinois . Petitioner electronically filed her Federal income tax return for 2007 . She reported income of $13,301 on Form 1040, U .S . Individual Income Tax Return, applied head of household tax . rates, and claimed : (1) Two dependency exemption deductions, one for her niece and one for her nephew ; and (2) the earned income tax credit . Petitioner testified that in 2007 she assisted with the support of her niece and nephew because their mother was going through a difficult financial situation . Respondent issued to petitioner a notice of deficiency : (1) Disallowing petitioner's claimed dependency exemption deductions for her niece' an d nephew and the.earned income credit ; ': and' (cid:127) (2 ) changing petitioner's filing status >from head of household' t o single : I . Burden of Proof Discussion Generally, the,Commiss .ioner's determinations are presume d correct, and th e taxpayer bears '. the 'burden of proving that thos e determinations are erroneous .' Rule '142 (a) ;. see, INDOPCO ; Inc . (cid:127)v . Commissioner , 503-U .S . 79, 84 (1992) ; Welch .v . Helvering 29 0 Deductions and credits ' area 'matter oflegislative grace , .and the taxpayer bears the burden of proving that he or she is -entitled to"-any deduction or credit claimed ; :Rule 142(x) ; Deput y v . du Pont , 308'U .S . :488,'--493= (1940) ; New Colonial .Ice Co .-° v IHelvering , , 292'U .S .~ 435 , 44:0 (1934) .' Likewise, the taxpayer i s obliged to demonstrate entitlement-to anadvantageous filing status , such as head of :household . Smith v . Commissioner, -'T .C .T Memo . 2008-229". II . Dependency Exemption Deduction ; A taxpayer is entitled to claim a, dependency exemption deduction under sec tion 151( c) only if the claimed .dependent is- a 'Petitioner has not claimed - or shown =that she meets the, . requirements under sec . 7491(a) to shift the burden of proof to respondent as to any' -factual, issue relating to' her liability .for xta . :1 4 "qualifying-child" or a "qualifying relative" as defined under section 152(c) and (d) . Sec . 15.2 (a) . A qualifying child includes the taxpayer's child, brother, sister, stepbrother, or stepsister, or a descendant of .any of them . See sec . 152(c)(1) and (2) . In addition,-section 152(c) provides that an individual is a qualifying child of the taxpayer only if : (1). The child had the same principal place of abode as the,taxpayer for more than one- half of the taxable year ; '(2) the child meets specified age : requirements ; and (3) the child did not provide over one-half of ., his or her own support for the taxable year . - t ,Petitioner contends that the children she claimed a s dependents are her niece and nephew and that they both lived wit h her from April through October 2007 . But she .presented n credible evidence that she was related to the'children or that the children lived with her during-2007 .2 Therefore, the . Court finds .that these children are not petitioner's qualifyin g children for 2007 .3 See Irions v . Commissioner, T .C . Memo . 2009- 96 . 2Petitioner did not provide the Court with'copies of the children's birth certificates, a copy of her rental agreement, or any credible evidence that the she and the children shared the same principal place of abode . 3Petitioner also failed to demonstrate that these children were her qualifying relatives for purposes of sec . 152(d) . II . Head of Household FilingnStatu s -Section 1(b) provides a- special . .-tax 'rate for an individual- } ,who qualifies as :a head of household . As relevant herein,' section 2(b)(l)",provides that' an . unmarried individual "shall be } considered a head .of a household-if, .,and'only if" that individual "maintains ..as-"his home a household which constitutes for more than one-half ofsuch,taxabletyear the principal place of abode' : of "a ,kqualifying child-of the . individual (as(cid:127),de'fined in, sectio n 1152(c) sec 2 (b) (1) (A) . O or "any= other person who is a . dependent of the .. taxpayer,"if ;the .taxpayer is entitled-to a I deduction for . the taxable year for,psuch person underRsectio n !151", sec . 2 (b) (1) (A) (ii ) } { Petitioner does not'=satisfytthe_requirements of section .2(b), because she 'has''not shown,-that the--two children she claimed'. a s section 152(c) := .Accord.ingly,"petitioner is not entitled to head 1of",household filing status'-for 2007 .' 'Respondent's determinatio n ren, as defined in E is sustained . 4I I I . { Earned : 'Income Tax -Credit 4 . . . Section,-32 (a) (1) allows an eligible individuala n earned income tax credit against that .'individual'- s income- ;tax liability . The amount .of the creditfor a"taxpayer with qualifying-childre n s determined according to the number of the taxpayer's qualifying children . Sec . 32 (b) Under section 32(c) (3) (A , a i. - 6 - qualifying child is defined the same as "a qualifying child of the taxpayer (as defined in section 152(c) * * * ) ." She has not shown that .the children she claimed as dependents are her qualifying children pursuant to section 152(c) . Therefore, petitioner is not entitled'to claim these children as qualifying children for purposes of the earned income tax credit under section 32(a)(1) . Individuals without qualifying children, however, may be eligible for an earned income credit if their darned income is no greater than the amount that the Code permits . Sec . 32(a)(1) , (b) (2) , (j) (1) ; Rowe v . Commissioner , 128 T .C . 13, 15 (2007) . . Earned income for purposes of the earned income credit includes wages and earnings from self-employment but excludes amounts received from a pension or annuity . Sec . 32(c)(2) ; sec . 1 .32- 2(c)(2), Income Tax Regs . Petitioner's earned income in 2007, $10,521, did not exceed the phaseout amount of $12,590. Accordingly, she is eligible to claim an earned income credit under section 32(c)(1) .(A)(ii) as an individual without a qualifying child . See sec . 32(b)(2)(A) ; Rev . Proc . 2006-53,,sec . 3 .07(1), 2006-2 C .B . 996, 1000 (announcing the specific amount for 2007) . The amount of the earned income credit will be computed under Rule 155 . i I To .reflect the foregoing ; Decision will be entere d under Rule 155 .