TAX COURT OPINION

Case: Lawrence Smith, Jr.
Docket Number: 3509-07S
Judge: Colvin
Opinion Type: bench
Filed: 03/21/2008
Pages: 10

UNITED STATES TAX COURT Washington, D .C . 2021 7 LAWRENCE SMITH, JR ., Petitioner, v . Docket No . 3509-07S 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 Tampa, Florida, on March 4, 2008, 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 Judg e Dated : Washington, D .C . March 21, 2008 SERVED APR 16 2008 3 1 Bench Opinion by Special Trial Judge Lewis R . Carluzzo 2 March 4, 200 8 3 Smith v . Commissioner Docket No . 3509-07S 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in-this case, and 6 the following represents the Court's oral findings of 7 fact and opinion . The oral findings of fact an d 8 opinion shall not be relied upon as precedent in any 9 other case . 10 This proceeding for the redetermination of a 11 deficiency is a Small Tax Case conducted pursuant to 12 the provisions of Section 7463 of the Internal Revenue 13 Code of 1986, as amended , and Rules 170 through 175 of 14 the Tax Court Rules of Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted by Section 7459(b) of the Internal 17 Revenue Code of 1986, as amended , and Rule 152 of the 18 Tax Court Rules of Practice and Procedure . 19 Hereinafter in this bench opinion, unless 20 otherwise indicated, section references are to the 21 Internal Revenue Code of 1986, as amended, in effect 22 for 2005 . Rule references are to the Tax Court Rules 23 of Practice and Procedure . 24 Lawrence Smith, Junior, appeared pro se . 25 Terra-Lynn Zentara appeared on behalf of Respondent . Heritage Reporting Corporatio n (202) 628-4888 4 1 In a notice of deficiency, dated December 4, 2006, 2 Respondent determined a $6,008 deficiency i n 3 Petitioner's 2005 Federal income tax . 4 The issues for decision are : (1) Whethe r 5 Petitioner is entitled to either of the two dependency 6 exemption deductions claimed on his 2005 Federa l 7 income tax return ; (2) whether Petitioner qualifies as 8 a head of household ; (3) whether Petitioner i s 9 entitled to a child tax credit (including an 10 additional child tax credit) ; and (4) whethe r 11 Petitioner is entitled to an earned income credit . 12 In order to protect the privacy interests of 13 Petitioner and the children for whom the Petitione r 14 claimed dependency exemption deductions, references to 15 the children will be by initials . See Rule 27(a)(3) . 16 Some of the facts have been stipulated and 17 are so found . At the time the petition was filed the 18 Petitioner resided in Florida . 19 During the year in issue, the Petitioner was 20 employed as a technician by Computer Generate d 21 Solutions (CGS) . He participated in a health 22 insurance plan offered to its employees by CGS . 23 In the beginning of 2005, the Petitioner 24 lived in an apartment that he shared with a roommate . 25 Towards the end of January or the beginning o f Heritage Reporting Corporation (202) 628-4888 5 1 February of that year, he moved from the apartment to 2 a house on Carriage Hill Drive in Temple Terrace , 3 Florida (the Temple Terrace residence) . 4 The Temple Terrace residence is owned by a 5 Maxine King (Ms . King), with whom Petitioner had been 6 involved in a personal relationship for many year s 7 prior to the year in issue . 8 Ms . King is the mother of D .J .K . and M .K . 9 (sometimes collectively referred to as the children) . 10 The children were enrolled in a elementary schoo l 11 during 2005 . Petitioner and Ms . King have never been 12 married to each other, and Petitioner was not married 13 as of the close of 2005 . 14 At all times relevant the Temple Terrace 15 residence was subject to a mortgage . The monthly 16 payments on the mortgage, around $1,300, were made by 17 Ms . King . She was employed during 2005 as a dental 18 assistant . 19 The utilities at the Temple Terrac e 20 residence averaged about $250 per month during 2005 . 21 Petitioner paid the utilities after he moved ther e 22 from his apartment . Petitioner also paid some of the 23 children's clothing, food, and health care expenses 24 (including health care insurance premiums for one of 25 them) . Heritage Reporting Corporation (202) 628-4888 6 1 At all times relevant, the children lived 2 with Ms . King at the Temple Terrace Residence . 3 Petitioner, Ms . King, and the children lived together 4 at the Temple Terrace residence from January or early 5 February throughout the remainder of 2005 . 6 Petitioner's 2005 Federal income tax return, 7 which was prepared by Jackson Hewitt Tax Service, was 8 timely filed . The $20,450 wages that Petitione r 9 earned from his employment during 2005 is the only 10 income reported on that return, which show s 11 Petitioner's filing status as a head of household . 12 The taxable income reported on that return 13 takes into account (1) the standard deduction 14 attributable to a head of household and (2) a 15 dependency exemption deduction for each of the 16 children . 17 The child tax credit (and additional child 18 tax credit), as well as the earned income credi t 19 claimed on Petitioner's 2005 return are computed as 20 though D .J .K . and M .K ., each is Petitioner' s 21 qualifying child for purposes of those credits . 22 In the notice of deficiency that forms the 23 basis for this case , Respondent : (1) Disallowed the 24 dependency exemption deductions claimed o n 25 Petitioner's return ; (2) changed Petitioner's filing Heritage Reporting Corporatio n (202) 628-4888 7 1 status from head of household to single, adjusted the 2 standard deduction accordingly , and applied the income 3 tax rate attributable to that filing status ; (3 ) 4 disallowed the child tax credit ( including the 5 additional child tax credit ) ; and (4) disallowed the 6 earned income credit . 7 In general , a taxpayer is entitled to a n 8 additional exemption deduction for each individual who 9 is a dependent of the taxpayer for the taxable year . 10 Section 1252 ( a), (c) . Ignoring exemptions no t 11 relevant here, the term "dependent " as used in Section 12 151 and elsewhere in the Internal Revenue Code, means 13 a qualifying child or a qualifying relative . Section 14 152(a) . 15 Subject to special rules not relevant here, 16 the term " qualifying child" means , an individual, who 17 among other requirements , is (1) a child of th e 18 taxpayer , or a descendant of such child , or (2) a 19 brother, sister, stepbrother, or stepsister of the 20 taxpayer , or a descendant of any such relative . See 21 Section 152 (c ) ( 1) (A) and (2) . 22 Neither D .J .K . nor M .K . is related to the 23 Petitioner in such a way . Consequently, neithe r 24 D .J . K . nor M .K . is Petitioner ' s qualifying child for 25 purposes of Section 151 or 152 . Heritage Reporting Corporation (202) 628-4888 8 1 Subject to special rules not relevant here, 2 and in addition to other requirements, for an 3 individual to fit within the definition of a 4 qualifying relative, the taxpayer must provide over 5 one-half of the individual's support . Section 6 152(d) (1) (C) . 7 The term "support" includes "food, shelter, 8 clothing, medical and dental care, education, and the 9 like ." Section 1 .152-1(a)(2)(i), Income Tax Regs . 10 We are satisfied, and the recor d 11 demonstrates, that Petitioner provided support in the 12 form of food, shelter, clothing, and medical care to 13 both of the children . Nevertheless, there has been no 14 showing that he provided more than one-half of th e 15 support with respect to either of them . That being 16 so, neither of the children fit within the definition 17 of Petitioner's qualifying relative during the year in 18 issue . 19 Because neither of the children fits within 20 the definition of Petitioner's qualifying child, or 21 Petitioner's qualifying relative, Petitioner is not 22 entitled to a dependency exemption deduction fo r 23 either of them . Respondent 's disallowances of those 24 deductions are sustained . 25 Among other requirements, to qualify as a Heritage Reporting Corporatio n (202) 628-4888 9 1 head of household a taxpayer must maintain as his home 2 a household that constitutes for more than one-half of 3 the taxable y ear the principal place of abode abov e 4 of (1 ) his or her qualifying child, as defined i n 5 Section 152(c), or (2) any other person for whom the 6 taxpayer is entitled to a dependency exemptio n 7 deduction . Section 2(b)(1) . 8 As discussed above, Petitioner ' s household 9 during 2005 did not include an individual who fits 10 within the definition of his qualifying child . That 11 being so , and because , as discussed above, the 12 Petitioner is not entitled to a dependency exemption 13 deduction for either of the children during 2005 , 14 Petitioner does not qualify as a head of household for 15 that year . The adjustments relating to Respondent's 16 change of Petitioner ' s filing status from head o f 17 household to single are sustained . 18 In general and subject to various conditions 19 and limitations , a taxpayer is entitled to a child tax 20 credit with respect to each qualifying child of th e 21 taxpayer . Sec . 24 ( a) . The term " qualifying child" as 22 used in Section 24 means an individual who has not 23 attained the age of 17, and who otherwise fits within 24 the definition of a qualifying child as defined i n 25 Section 152(c) . Section 24 (c) . 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 1 0 Petitioner treated D .J .K . and M .K . each a s his qualifying child for purposes of the child ta x credit (and the additional child tax credit) claime d on his 2005 return . As discussed above, neither chil d fits within the definition of Petitioner's qualifyin g child under Section 142(c) . It follows that neithe r child fits within the definition of Petitioner' s qualifying child for purposes of the child tax credit . Consequently, Petitioner is not entitled t o a child tax credit (or an additional child tax credit ) for 2005 . Respondent's disallowance of the child tax credit (including the additional child tax credit) i s sustained . In general, and subject to variou s conditions and limitations, an eligible individual i s entitled to a child tax credit . Section 32(a) . Although Petitioner appears to fit within th e definition of an eligible individual, because of hi s income during 2005, Petitioner's entitlement to a n earned income credit for that year depends upo n whether he has a qualifying child for purposes of tha t credit . Section 32(c)(1) . For purposes of the earned income credit , the term "qualifying child" means, with exemptions no t relevant here, the qualifying child of the taxpayer a s Heritage Reporting Corporation (202) 628-4888 1 1 1 defined in Section 152(c) . 2 The earned income credit claimed on 3 Petitioner's 2005 return reflects Petitioner' s 4 treatment of D .J .K . and M .K ., each as his qualifying 5 child for purposes of that credit . For the reasons 6 discussed above, however, neither child is becaus e 7 neither child is Petitioner's "qualifying child" as 8 that term is defined in Section 152(c) . 9 It follows that Petitioner is not entitled 10 to the earned income credit claimed on his 2005 return 11 and Respondent's disallowance of that credit i s 12 sustained . 13 To reflect the foregoing, decision will be 14 entered for Respondent . This concludes the Court's 15 oral findings of fact and opinion in this case . 16 (Whereupon, at 10 :06 a .m ., the bench opinion 17 in the above-entitled matter was concluded . ) 18 19 20 21 22 23 24 25 Heritage Reporting Corporation (202) 628-4888