TAX COURT OPINION

Case: Aaron Jon Macom
Docket Number: 18316-10S
Judge: Haines
Opinion Type: bench
Filed: 05/03/2011
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 AARON JON MACOM, Petitioner, . v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) ) ) ORDER Docket No. 18316-10S 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 Seattle, Washington on April 21, 2011, containing his oral findings of the conclusion of trial. the trial of this case before Judge Haines at fact and opinion rendered at the pages of the the In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Harry A. Haines Judge Dated: Washington, D.C. May 3, 2011 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 Senior Judge Harry A. Haines April 21, 2011 Aaron Jon Macom v. Commissioner Docket No.: 18316-105 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. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. Respondent determined a $2,795 deficiency in petitioner's 2007 Federal income tax. The issues for decision are: (1) Whether petitioner is entitled to claim a dependency exemption under section 151 for his daughter; (2) whether petitioner is entitled to claim the head of household filing status under section 2(b); and (3) whether petitioner is entitled to claim the child tax credit under section 24(a), an earned income credit under 32(a), or a child care credit under section 21(a). Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended, and Rule references are to the Tax-Court Rules of Practice and Procedure. The parties' stipulation of facts and the attached exhibits are incorporated herein by this 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 reference. Petitioner is an individual who maintained his legal residence in the state of Washington at the time his petition was filed. On March 8, 2005, petitioner and his ex- wife, Kelsey Macom (Ms. Macom), were divorced and a decree of dissolution was issued by the Pierce County Superior Court. Petitioner and Ms. Macom entered into a final parenting plan for the care of their daughter. The final parenting plan designated Ms. Macom as the custodial parent. Petitioner and Ms. Macom also entered into a final order of child support providing that tax exemptions claimed with respect to the daughter would be alternated each tax year, with Ms. Macom claiming the daughter in odd tax years and petitioner claiming the daughter in even tax years. Ms. Macom had physical custody of the daughter in 2007 and petitioner was current on his child support obligations. Ms. Macom has not signed a Form 8332, Release of Exemption for Child of Divorced or Separated Parents, for 2007. Petitioner timely filed his Form 1040, U.S. Individual Income Tax Return, for 2007. He reported wages of $32,626, claimed a dependency exemption for his daughter, head of household filing status, a child tax credit, an earned income credit, and a child care 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 credit. On May 17, 2010, respondent issued petitioner a notice of deficiency for 2007, which denied the dependency exemption, head of household filing status, child tax credit, earned income credit, and the child care credit. On August 16, 2010, petitioner filed a petition with this Court in response to the notice of deficiency. In general, the Commissioner's determination set forth in a notice-of deficiency is presumed correct, and the taxpayer bears the burden of showing that the determination is in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Deductions are a matter of legislative grace. Deputy v. du Pont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). A taxpayer bears the burden of proving entitlement to any deduction claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); Welch v. Helvering, supra; Wilson v. Commissioner, T.C. Memo. 2001-139. Dependency Exemption Deductions A taxpayer may claim a dependency exemption "for each individual who is a dependent (as defined in section 152) of the taxpayer for the taxable year." Sec. 151(a), (c). Section 152(a) defines a dependent 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 6 to include a "qualifying child." A qualifying child must, inter alia, share the same principal place of abode as the taxpayer for more than one-half of the year in issue. Sec. 152(c). In the case of divorced or separated parents, special rules determine which parent may claim a dependency exemption for a child. See sec. 152(e). As relevant to the present case, section 152(e) (2) allows the noncustodial parent to claim a dependency exemption for a child if the custodial parent signs a written declaration releasing her claim to the exemption and the noncustodial parent attaches the declaration to his Federal income tax return. The final parenting plan designated Ms. Macom as the daughter's custodial parent. The declaration required by section 152(e) (2) must be made on either Form 8332 or on a statement conforming to the substance of that form. Miller v. Commissioner, 114 T.C. 184, 189 (2000); see sec.. 1.152-4T(a), Q&A-3, Temporary Income Tax Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984). Form 8332 requires a taxpayer to furnish: (1) The name of each child, (2) the name and social security number of the noncustodial parent claiming the dependency exemption, (3) the social security number of the custodial 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 parent, (4) the signature of the custodial parent, (5) the date of the custodial parent's signature, and (6) the year or years for which the claims were released. See Miller v. Commissioner, supra at 190. "The exemption may be released for a single year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration." Sec. 1.152-4T(a), Q&A-4, Temporary Income Tax Regs., 49 Fed. Reg. 34459 (Aug. 31, 1984). Petitioner failed to attach Form 8332 to his 2007 return and Ms. Macom did not sign Form 8332. In Boltinghouse v. Commissioner, T.C. Memo. 2003-134, the taxpayers attached to their return a copy of a separation agreement, which was signed by both the custodial and noncustodial parents. The separation agreement unconditionally granted the noncustodial parent the dependency exemptions. The Court held that the separation agreement met the requirements of a written declaration under section 152(e) (2) because it conformed in substance to Form 8332. In this case, petitioner did not attach a copy of the divorce decree, final parenting plan, or final order of child support to his 2007 return. Further, the final order of child support specifically provided that Ms. Macom, and not petitioner, was 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 entitled to the tax exemption with respect to their daughter in 2007, an odd tax year. Accordingly, we sustain respondent's determination with respect to the 8 dependency exemption. Head of Household Filing Status Section 1(b) imposes a special tax rate on an individual taxpayer who files a Federal income tax return as a head of household. Section 2(b) in pertinent part defines a head of household as an individual taxpayer who: (1) Is unmarried as of the close of the taxable year and is not a surviving spouse; and (2) maintains as his home a household that constitutes for more than one-half of the taxable year the principal place of abode, as a member of such household, of a dependent for whom the taxpayer is entitled to a deduction under section 151. See also, e.g., Rowe v. Commissioner, 128 T.C. 13, 16-17 (2007). As discussed above, petitioner is not entitled to claim his daughter as a dependent in 2007. Accordingly, we sustain respondent's determination with regard to the head of household designation. Child Tax Credit, Earned Income Credit and Child Care Credit Section 24(a) allows a child tax credit with respect to each qualifying child of a taxpayer. A 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 9 "qualifying child" for purposes of section 24(a) means a qualifying child of the taxpayer as defined in section 152(c). As discussed above, a qualifying child must share the same principal place of abode as the taxpayer for more than one-half of the year in issue. Sec. 152(c). Petitioner's daughter did not share petitioner's principal abode with him in 2007. Accordingly, we sustain respondent's determinations with respect tx> the child tax credit. Section 32(a) (1) allows an eligible individual a credit against his Federal income tax liability, calculated as a percentage of his earned income, subject to certain limitations. Rowe v. Commissioner, supra at 15. Different percentages and amounts are used to calculate the earned income credit, depending on whether the eligible individual has no qualifying children, one qualifying child, or two or more qualifying children. Sec. 32(b); Id. Petitioner has no qualifying children but cannot claim the earned income credit because the amount of his adjusted gross income determined by the phaseout percentage exceeds the amount of the credit determined by the credit percentage of the earned income. Sec. 32(a) (2). Section 21(a) generally allows a credit 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 10 against the tax to any individual who maintains a household that includes as a member one or more qualifying individuals. The term "qualifying individual," under section 21(b), includes a dependent of the taxpayer (as defined in section 15(a) (1)) under age 13. As discussed above, petitioner is not entitled to the dependency exemption with respect to his daughter in 2007. Accordingly, we sustain respondent's determination with respect to the child care credit. In reaching our holdings, we have considered all arguments made, and, to the extent not mentioned, we conclude that they are moot, irrelevant, or without merit. To reflect the foregoing, decision will be entered for respondent. This concludes the Court's oral findings of facts and opinion. (Whereupon, at 2:53 p.m., the bench opinion in the above-entitled matter was concluded.) // // // // // Heritage Reporting Corporation (202) 628-4888