TAX COURT OPINION

Case: Jose L. Davenport
Docket Number: 14203-09S
Judge: Colvin
Opinion Type: bench
Filed: 11/02/2010
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 JOSE L . DAVENPORT , Petitioner . v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket No. 14203-09S. Pursuant to Rule 152 (b) , Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to Petitioner and to respondent a copy of transcript of in the above case before Judge David Gustafson at Philadelphia, Pennsylvania, on October 20, 2010, containing his oral fact and opinion rendered at conclusion of the pages of the trial findings of the trial. the the In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) David Gustafson Judge Dated: Washington, D.C. November 2, 2010 SERVED NOV -52010 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 3 Bench Opinion by Judge David Gustafson Davenport v. Commissioner, No. 14203-09S. The Court has 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. The oral Findings of Fact and Opinion shall not be relied on as.precedent in any other case. This Bench Opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. By a statutory notice of deficiency dated June 15, 2009 [Ex. 2-J], the IRS determined a deficiency in the Federal income tax of petitioner Jose L. Davenport for the year 2007, in the amount of $4,614. After concessions, the sole issue in dispute is Mr. Davenport's entitlement to claim L.W. and T.M. (two minor children whose privacy we protect by using their initials) as "qualifying relative" dependents. For the reasons explained hereafter, we will hold against Mr. Davenport. This case was tried in Philadelphia, Pennsylvania, on October 19, 2010. Mr. Davenport and Mr. Lee Woodard were witnesses. The parties' Heritage Reporting Corporation (202) 628-4888 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 4 Stipulation of Facts, with Exhibits 1-J (Mr. Davenport's 2007 tax return) and 2-J (the notice of deficiency) were admitted into evidence. Mr. Davenport offered no other documentary evidence. We find the following facts: Findings of Fact At the time he filed his petition, Mr. Davenport resided in Pennsylvania. [Stip. 1.] Before 2007 407. Davenport maintained a home but from time to time lived with a woman named Tracy. Even though he and Tracy were never married, Mr. Davenport considered himself to be the step-father of Tracy's adult daughter Jasmine and therefore the grandfather of Jasmine's children. Jasmine rented a house on North 11th Street in Philadelphia, with her boyfriend Lee Woodard, her adult brother Jeffrey, and her four children: L.W. (Lee's daughter), T.M. (the daughter of Alvin Marbra), and two other children (with other fathers whose names are not in the record). The residents of the house were therefore three adults and four children. Sometime in 2006 Jasmine told Mr. Davenport that she was having difficulty with her rent and was months behind. (M:r. Davenport did not testify, and the record does not show, what the amount of the arrearage Heritage Reporting Corporation (202) 628-4888 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 5 was.) Mr. Davenport had a regular job in const'ruction, and he agreed to move into the 11th Street house (as the fourth adult) and to help by paying rent. In November of 2007 the entire household was evicted for non-payment of rent. Mr. Davenport and Mr. Woodard moved into a house on Courtland Street, and the others followed them there a week and a half later, after the men had fixed up the house. The record does not show who held the lease on the Courtland Street house. We are unable to find that Mr. Davenport paid more than half of the support for the children in 2007. Mr. Davenport timely filed his 2007 tax return. (Stip. 2.) On that return, he claimed L.W. (then age 2) and T.M. (then age 6) as dependents and as "qualifying children" for purposes of earned income tax credit (EITC) and other tax benefits. (Ex. 1-J.) On March 16, 2009, the IRS mailed to Mr. Davenport a notice of deficiency (Ex. 2-J) pursuant to section 6212. It made various adjustments, including disallowance of the dependency exemptions for L.W. and T.M. On June 12, 2009, Mr. Davenport filed a timely petition in this Court challenging the adjustments in the notice of deficiency. He eventually conceded some Heritage Reporting Corporation (202) 628-4888 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 of the adjustments (Stip. 4-5), but he continues to contend that he is entitled to claim L.W. and T.M. as 6 dependents. Opinion The IRS's determination is presumed correct, and generally the taxpayer bears the burden to prove his entitlement to the exemptions and credits he claimed. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Mr. Davenport has not contended that the burden of proof has shifted under section 7491(a), and the record does not suggest any basis for such a contention. We therefore analyze the dependent issues with the burden of proof on Mr. Davenport. Section 151(a) of the Internal Revenue Code provides for a deduction for certain exemption amounts. Section 151(c) allows an exemption for "each individual who is a dependent (as defined in section 152)". Section 152(a) provides that "dependent" means either "a qualifying child" or "a qualifying relative". On his return, Mr. Davenport claimed L.W. and T.M. as "qualifying child[ren]" and reported each of them as a "grandchild". While this may have been consistent with colloquial usage in his family, it was not correct under the Internal Revenue Code, and Heritage Reporting Corporation (202) 628-4888 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 7 Mr. Davenport now admits that L.W. and T.M. are not "qualifying children". (See Stip. 6.) However, he contends that L.W. and T.M. are "qualifying relative[s]". That term is defined in section 152(d) (1) by four characteristics, the first of which is a "relationship" test that is satisfied in the case of " [a]n individual * * * who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer's household." See sec. 152(d) (1) (A), (d) (2) (H). We hold that L.W. and T.M. satisfy that test. We assume that they also pass the second and fourth tests, which we therefore do not discuss here: However, the third test, found in section 152(d) (1) (C), requires that the individual claimed as a "qualifying relative" dependent be someone "with respect to whom the taxpayer provides over one-half of the individual's support for the calendar year in which such taxable year begins". Because we cannot find that Mr. Davenport provided more than half the support of L.W. and T.M., we cannot hold that they meet this support test. The lease on the 11th Street house was never in Mr. Davenport's name, and he did notr actually know the amount of the rent. He says he paid what Jasmine said Heritage Reporting Corporation (202) 628-4888 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 8 she needed, which included some arrearage. He says he paid in cash; and therefore has no receipts or cancelled checks to substantiate any rent payments. He admitted that he did not know what portion of the rent Jasmine might have paid. The eventual eviction makes it even more unclear exactly what was being paid for rent. Mr. Davenport says he paid 75 percent of the utilities and half of the food expense, but he made no pretense that these figures were anything other than estimates. He testified that he made occasional incidental expenditures on behalf of all four children for movies, clothing, and the like, but he made no attempt to quantify these expenditures. He did not pay medical or educational expenses and does not know what they amounted to. Mr. Davenport testified that, overall, he paid "better than half" of the household expenses, and his estimate of the portion borne by the other adults was variously "one eighth" and "on a scale of one to ten, two percent". Mr. Woodard worked occasional handy man jobs, Jeffrey worked with him, and Jasmine worked for some time as a crossing guard;.but we cannot find even the approximate amount of these earnings. When asked whether the household received any form of public Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2s 9 assistance, Mr. Davenport answered, "I'm not sure; maybe"; and Mr. Woodard answered, "Not to my knowledge"; so we are unable to rule out the possibility that the household received public assistance. When asked whether the non-resident fathers of Jasmine's other children provided support, Mr. Davenport answered, "Not to my knowledge"--again, leaving us unable to rule out this source of support. Even assuming (as we do) that Mr. Davenport's testimony was subjectively sincere, it was not at all specific; it was obviously estimation and guesswork; it was given three years after the fact; and it was supported by no documentation at all. In sum, we are unable to find that he paid more than half of the support of L.W. and T.M., and we hold that he is not entitled to claim them as dependents. Decision will be entered for respondent. This concludes the Court's oral Findings of Fact and Opinion in this case. (Whereupon, at 11:01 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // Heritage Reporting Corporation (202) 628-4888