TAX COURT OPINION

Case: Felix Orta
Docket Number: 23288-09S
Judge: Colvin
Opinion Type: bench
Filed: 12/06/2010
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 FELIX ORTA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket No. 23288-09S. 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 the pages of the transcript the trial in the above case before Judge Joseph Robert Goeke at findings Petitioner and to respondent a copy of of Miami, Florida, on November 3, 2010, containing his oral of the trial. fact and opinion rendered at the conclusion of In accordance with the oral findings of fact and opinion, a decision will be entered under Rule 155. (Signed) Joseph Robert Goeke Judge DATED: Washington, D.C. December 6, 2010 SERVED DEC - 9 2010 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 Joseph Robert Goeke Felix Orta v. Commissioner Docket No. 23288-09S November 3, 2010 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. This case was heard pursuant to the provisions of Section 7463 of the Internal Revenue Code in effect at the time the petition was filed. Pursuant to Section 7463 (b) , the decision to be entered is not reviewable by any other court, and as stated previously, the opinion shall not be tteated as precedent for any other case. Section references after this are to the Internal Revenue Code, and rule references are to the Tax Court Rules of Practice and Procedure. This opinion is rendered pursuant to Rule 152. This case is before the Court based upon the Court's deficiency jurisdiction. Respondent issued a notice of deficiency to Mr. Orta for the taxable year 2008, asserting a deficiency in income tax of $3,658. This deficiency in income tax turns on four distinct 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 issues: whether the Petitioner is entitled to an exemption for his stepson, whether the Petitioner qualifies for head of household filing status, whether the Petitioner is entitled to the earned income credit, and finally whether the Petitioner is entitled to a child tax credit . On the income tax return he filed for 2008, which Nas a separate return, Petitioner claimed an exemption for his stepson, who was 12 years old in 2008 . Respondent has disallowed this exemption because Respondent maintains that the stepson did not reside with Petitioner for over one-half of the taxable year. Petitioner claimed head of household filing status on the 2008 return. Respondent maintains that he is not entitled to that filing status because he was married at the close of the taxable year 2008 and because Respondent has disallowed the claimed dependency exemption. Regarding the earned income credit which Petitioner claimed on the 2008 return, Respondent again maintains that he is not entitled to that credit because he was married at the close of 2008, and he did not file a joint income tax return. Finally, regarding the child tax credit claimed on the 2008 return, Respondent maintains the Petitioner is not Heritage Reporting Corporation (202) 628-4888 l I f f I 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 entitled to this credit because he has failed to show that his 12-year old stepson lived with him for more than one-half of the taxable year. Two of the issues in question turn directly on whether the 12-year old son of Petitioner's spouse lived with him for over the taxable year. And we'll address that issue first. The parties have stipulated that the Petitioner was married to the mother of the 12-year old child in question on February 13th, 2008. And the parties have stipulated that the Petitioner remained married as of the end of 2008. The parties also agree that Petitioner's wife in 2008 had a minor child who would have been 12 years old for most of 2008. It's also undisputed that Petitioner received $3, 721 in wages and $6, 372 in unemployment compensation in 2008. The statutory law controls the outcome of this case, based upon an application of the facts. Under Section 151 (c) , a taxpayen is entitled to an exemption for an.individual who qualifies as a dependent under Section 152. Section 152 (a) defines a dependent as a qualifying child or a qualifying relative of the taxpayer. Section 152 (c) defines the term qualifying child. Such a child is either a child of the taxpayer or a descendant of such child, or 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 6 brother, sister, stepbrother or stepsister of the taxpayer, or a descendant of any such relative. The qualifying child must have the same principal place of abode as the taxpayer for more than one-half of the taxable year, and must not have obtained the age of 19 at the close of the taxable year. And the qualifying child must not have provided over one-half of his or her.own support for the taxable year. Section 152(f) (1) (A) defines child as an individual who is a son, daughter, stepson, or stepdaughter of the taxpayer. The child in question in this case was Petitioner's child under Section 152(f) (1) (A). The case turns on whether the child resided with the Petitioner for over six months of 2008. Petitioner testified that after he married the mother of the boy for whom he claims a dependency exemption, there was an incident at their home regarding his stepdaughter, and that after the police came, he determined it was in the best interests of the family if he moved across the street with his mother-in-law. He also testified that at that time; his mother-in-law had separated from a male individual who had previous lived with her and paid her mortgage or 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 rent. Petitioner stated that he then moved across the street, and that his stepson was already residing with the mother-in-law. He stated that that would have been in the spring of 2008, and that he resided in the house across the street with his mother-in-law and his stepson through the fall of 2008, but that he left that residence and moved back across the street with his wife and his stepdaughter at the end of 2008, and that the stepson also moved back with him. Under Section 2(b) (1), an individual shall be considered the head of household if and only if such individual is not married at the close of the taxable year, is not a surviving spouse, and either maintains as his home a household that constitutes for more than one-half of such taxable year the principal place of abode as a member of such household of a qual-ifying child. The question of whether the Petitioner is entitled to head of household status turns on both the question of whether he is entitled to the dependency exemption and whether he was married at the end of the taxable year. Under Section 2(c), an individual shall be treated as not married, even if he is legally married, if he files a separate return and during the last six months of the taxable year, such individual 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 spouse is not a member of the household where the Petitioner resides. In this case, the Petitioner's own testimony indicates that he did reside with his wife at the end of the taxable year. So apart from whether he is entitled to the dependency exemption of his son, Petitioner is not to be treated as the head of household for the taxable year 2008. Likewise, with respect to the earned income credit, in order to be entitled to that credit as a married person, Petitioner must file a joint return. Petitioner did not file a joint return for 2008, and resided with his wife at the end of 2008, such that he should be treated as a married person. Therefore, Petitioner is not entitled to the earned income credit in 2008. The remaining two issues involving a dependency exemption and the child tax credit turn on whether Petitioner resided for six months with his stepson. There is no dispute in this case about any other party, including the Petitioner's wife, claiming the stepson as a dependent in their return in conflict with the Petitioner's claim of the dependent. Regarding the question of whether the stepson resided with the Petitioner for six months of 2008, we find the Petitioner's testimony to be 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 credible, and we determine that Petitioner is entitled to an exemption for a stepson, and that Petitioner is entitled to the child tax credit . Given the resolution of this case, a Rule 155 computation will be necessary. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 3:57 p.m., the bench opinion in the above-entitled matter was concluded.) // // // // // / // // // // // / // // // Heritage Reporting Corporation (202) 628-4888