TAX COURT OPINION

Case: Ricardo Oliva
Docket Number: 10504-14S
Judge: Carluzzo
Opinion Type: bench
Filed: 05/11/2015
Pages: 7

CZ UNITED STATES TAX COURT WASHINGTON, DC 20217 RICARDO OLIVA, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Docket No. 10504-14S ) ) ) ) ) ) O R D E R Pursuant to the determination of the Court as set forth in its bench opinion rendered on April 30, 2015, it is 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 in the above case before Special Trial Judge Lewis R. Carluzzo at Miami, Florida, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. 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 11, 2015 SERVED May 13 2015 Capital Reporting Company 1 Bench Opinion by Special Trial Judge Lewis Carluzzo 3 2 April 30, 2015 3 Ricardo Oliva v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 10504-14S THE COURT: 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 (bench opinion). Section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant periods, and Rule references are to the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. This proceeding for the redetermination of a deficiency is a small tax case subject to the provisions of section 7463 and Rules 170 through 175. Pursuant to section 7463(b) the decision entered in this case shall not be treated as precedent for any other case. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority. Ricardo Oliva appeared on his own behalf. Jamie Schindler appeared on behalf of Respondent. In a notice of deficiency dated February 18, 2014 (notice), respondent determined a $2,929 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 deficiency in petitioner's 2012 Federal income tax. As suggested by an notation made by petitioner on the copy of the notice attached to the petition, the deficiency is attributable, in large measure if not entirely, to the disallowance of the earned income credit claimed on petitioner's 2012 Federal income tax return return). The issues for decision are: (1) whether petitioner qualifies as a head of household; (2) 10 whether petitioner is entitled to an exemption 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 deduction for Ligia Molina; (3) whether petitioner is entitled to a student loan interest deduction; and (4) whether petitioner is entitled to an earned income credit. Some of the facts have been stipulated and are so found. At the time the petition was filed, petitioner lived in Florida. Petitioner and Ligia Molina (Ms. Molina), formerly married to each other, lived together with their three daughters for most of 2012. Around Thanksgiving of that year, and after divorce proceedings between petitioner and Ms. Molina had been initiated, they separated, but they were not yet divorced as of the close of 2012. As noted on petitioner's return, Ms. Molina 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 was unemployed during a part of 2012. Her unemployment compensation along with other income that she earned during 2012 is reported on her 2012 Federal income tax return. As relevant here, on his return petitioner: (1) shows his filing status as a head of household; (2) claimed an additional personal exemption deduction for Ms. Molina (on his return petitioner identifies Ms. Molina as his "ex-wife" and characterized her as his "dependent"); (3) claimed a deduction for student loan interest; (4) computed his taxable income taking into account the standard deduction attributable to a head of household; and (5) claimed an earned income credit. In the notice respondent: (1) changed 16 petitioner's filing status from head of household to 17 18 19 that of a married individual filing separately and adjusted the standard deduction accordingly; (2) disallowed the exemption deduction claimed for Ms. 20 Molina; (3) disallowed the student loan interest 21 22 23 24 25 deduction; (4) disallowed the earned income credit; and (5) allowed a child tax credit, including an additional child tax credit, apparently not claimed on petitioner's return. Given the amount of the deficiency 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 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 determined in the notice, and because of the allowance of the child tax credit, it would appear at first glance that the only adjustment that has any tax consequence is the disallowance of the earned income credit. Because a portion of the child tax credit is treated as refundable, however, petitioner's entitlement to the deductions here in dispute, more likely than not, would result in a reduced deficiency, so we will address all of the issues listed above, and because of its impact on the other issues, we'll first address petitioner's proper filing status. Petitioner believed himself to be divorced from Ms. Molina by the close of 2012, but now acknowledges that he was not. For Federal income tax purposes, as of the close of 2012 petitioner is treated as a married individual. See section 7703(b). That being so, he does not qualify as a head of household, and his proper filing status is as respondent shows in the notice, that is, as a married individual filing separately. See section 2(b) (1) (which reads in relevant part, "An individual shall be considered a head of household if, and only if, such individual is not married as of the close of the taxable year"). Because respondent properly changed 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 petitioner's filing status from a head of household to that of a married individual filing separately, it follows that the resultant adjustment to petitioner's standard deduction is sustained. Establishing petitioner's correct filing status also resolves his entitlement to an earned income credit. Subject to a variety of conditions and limitations an eligible individual is entitled to an earned income credit. See section 32(a)(1). A 10 married individual, however, if otherwise eligible 11 12 13 14 15 for an earned income credit, is not entitled to an earned income credit unless the individual files a joint return with his spouse. See section 32(d). That did not happen here, and therefore petitioner is not entitled to an earned income credit. 16 Respondent's disallowance of that credit is 17 18 19 20 21 22 23 24 25 sustained, although it should be noted that we are unable to reconcile the amount of the credit shown on the return with the disallowance of the credit shown in the notice. As with the earned income credit, establishing petitioner's proper filing status, in effect, resolves petitioner's entitlement to a student loan interest deduction. A taxpayer is not entitled to an otherwise allowable deduction for 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company . .... 8 student interest unless the taxpayer files a joint return. See section 221(e)(2). As noted above, that could not happen here. Finally, we focus on petitioner's entitlement to an exemption deduction for Ms. Molina, and again the resolution of petitioner's filing status, in effect, resolves petitioner's entitlement to that deduction. Because as of the close of 2012, 1 2 3 4 5 6 7 8 9 Ms. Molina was still petitioner's spouse, and because she had income that year, petitioner, as a married individual filing separately, is not entitled to claim an exemption deduction for her. See section 151(b). Respondent's disallowance of that deduction is sustained. To reflect the foregoing, decision will be entered for respondent. This concludes the bench opinion in this case. (Whereupon, at 2:18 p.m., the above- entitled matter was concluded.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com