TAX COURT OPINION

Case: Lawrence J. Willoughby
Docket Number: 27969-07
Judge: Chiechi
Opinion Type: memo
Filed: 03/18/2009
Pages: 13

T .C . Memo . 2009-58 UNITED STATES TAX COUR T LAWRENCE J . WILLOUGHBY, P titioner V . COMMISSIONER OF INTERNAL REV NUE, Responden t Docket No . 27969-07 . Filed March 18, 2009 . Lawrence J . Willoughby, pro . se . J . Anthony Hoefer , for respondent . MEMORANDUM FINDINGS OF FACT AND OPINION CHIECHI, Judge : Respondent deter fined a deficiency of $6,195 in petitioner's Federal income ax (tax) for his taxabl e year 2006 . The issues remaining for decisionlfor petitioner's taxabl e year 2006 are : SERVED MAR 18 2009 c - 2 - (1) Is petitioner entitled to head of household filin g status under section 2(b)?1 We hold that he is not . (2) Is petitioner entitled to the child care credit under section 21(a)? We hold that he is not . (3) Is petitioner entitled to the additional child tax credit under section 24? We hold that'he is not . (4) Is petitioner entitled to the earned income tax credit under section 32(a)? We hold that he is not . FINDINGS OF FAC T Some .of the facts in this case have been stipulated by th e .parties and are so found . At the time petitioner filed the petition, he resided in Nebraska . Throughout 2006, petitioner . resided with a woman to whom he was not married and that woman's two daughters, JP and KP, who were not his biological or adoptive daughters . During that year, petitioner provided more than one-half of the total support of each of those children . Neither JP nor KP suffered from any physical or mental impairment in 2006 . Petitioner timely filed Form 1040A, U .S . Individual Incom e Tax Return, for his taxable year 2006 (2006 tax return) . In the 2006-tax return, petitioner claimed (1) head of household filin g 'All section references are to the Internal Revenue Code (Code) in effect for the year at issue . All Rule references are to the Tax Court Rules of Practice and Procedure . status, (2) dependency exemption deduct ons for JP and KP, (3) the child care credit, (4) the addi ional child tax credit , and (5) the earned income tax credit . that return, petitione r claimed the additional child tax credit because he reported in that return a total tax liability of z e 0 . Respondent issued to petitioner a otice of deficiency (notice) for his taxable year 2006 . In that notice, respondent, inter alia, disallowed petitioner's cla med (1) head of household filing status, (2) dependency exemption deductions for JP and KP, (3) child care credit, (4) additional c ild tax credit, an d (5)"earned income tax credit . OPINION It is petitioner's position that, ecause respondent con- cedes that he is entitled for his taxab e year 2006 to dependency exemption deductions for JP and KP, he 's entitled for that year to head of household filing status, the child care credit, the additional child tax credit, and the earned income tax credi t that he claimed in his 2006 tax return . Head of Household Filing Status Section 1(b) provides a special tax rate for an individual who qualifies as a head of household . As pertinent here, section 2(b)(1) provides that an unmarried individual "shall be consid- ered a head of a household" if that in ividual "maintains as his home a household which constitutes for ore than one-half of such 4 taxable year the principal place of abode" of "a qualifying child, - 4 of the individual (as defined in section 152(c) * * *)",isec . 2(b)(1)(A)(1), or "any-other person. who is a dependent of the taxpayer, if the taxpayer is entitled to a . deduction for the taxable year for such person under section 151", sec . 2(b)(1)(A)(ii) . As pertinent here, however, section 2(b)(3)(B)(i) provides that "a taxpayer shall not be considere d to be a head of a household,* * * by .reason of an individual who would .not be a dependent for the .taxable year but for * *' subparagraph (H) of section 152 (d) ; (2) " . Respondent concedes that petitioner is entitled fori ;his taxable year 2006 to dependency exemption deductions for JP and KP . According to respondent, petitioner is entitled to those deductions only because JP and KP are his dependents under section 152(a)(2) by reason of their being his qualifying rela- tives under section 152(d)(2)(H) . We must determine whether respondent is correct . If we find that respondent is correct, petitioner is not entitled for his taxable year 2006 to head of household filing status . See sec . 2(b)(3)(B)(i) . Section 151(a) provides that "the exemptions provided by this section shall be allowed as deductions" to a taxpayer . Section 151(c) provides for an exemption for each dependent of the taxpayer as defined in section 152 . Section 152(a) .defines 5 - the term "dependent" to mean either- "(1 a qualifying child, .or (2) a qualifying relative . " We turn first to whether JP and KP are petitioner's qualify- ing children as defined in section 152(c) and therefore are his dependents under section 152(a)(1) . Section 152(c) defines the term "qualifying child" as follows : SEC . 152 . DEPENDENT DEFINED . (c) Qualifying Child .--For.pu poses of this- section-- (1) In general .--The ter means,, with' respectto any to able year, an individual-- "qualifying child" payer for any tax- (A) who bears a rel taxpayer described in p a tionship to the ragraph (2) , (B) who has the sam abode as the taxpayer fo of such taxable year, , e principal place of r more than one-hal f (C) who meets the a ge requirements o f paragraph (3), an d (D) who has not pro of such individual's own calendar year in which t the taxpayer begins . vided over one-half support for the he taxable year o f A person under age 19 at the close of t he taxpayer's taxable year meets the age requirements of section 1 52(c) (1) (C) . See sec . 152 (c .) (3) (A) (i) . Section 152(c)(2) provides that a person bears a relation- ship to the taxpayer for purposes of se ction 152 (c) (1) (A) "i f such individual is--(A) a child of the taxpayer or a descendant 4 - 6 - of such a child, or (B) a brother, sister, stepbrother, or stepsister of the taxpayer or a descendant of any such relative ." Section 152(f)(1) defines the term "child" for purposes o f section 152 to mean either "a son, daughter, stepson, or step- daughter of the taxpayer," sec . 152(f)(1)(A)(i), or "an eligible foster child of the taxpayer", 2 sec . 152(f) (1) . (A) (ii ) . . An indi- vidual (1) legally adopted by the taxpayer or (2) placed with the taxpayer for adoption by the taxpayer is treated as a child of the taxpayer by blood . 3 Sec . .152 (f) (1) (B) . The term "stepdaughter" in section 152(f)(1)(A) is not defined in the Code .: "Where, as is the case here, the statute does not define the word, we generally interpret it by using its ordinary and common meaning ." Carlson v . Commissioner , 116 T .C .. 87, 93 (2001) (fn . ref . omitted) . Merriam-Webster's Collegiat e 'Dictionary 1223 (11th ed . 2007), defines the word "stepdaughter" to mean "a daughter of one's wife or husband by a formerpart- ner" . We have found that during 2006 petitioner was not married to the mother of JP and KP . On the record before us, we fin d that during that year neither JP nor KP was petitioner' s ;, step- daughter under section 152 (f) (1) (A) (i) . 2Petitioner does not contend that JP and KP are eligible foster, children under sec . 152(f) (1) (A) (ii) . 3Petitioner does not contend that JP and KP were placed with him for adoption before or during 2006 . We have found that during 2006 J P and KP were not peti- tioner's biological or adoptive-daughters . See sec . 152 (f) (1) (A) (i) and (B) . On the recor d before us, we find that during 2006 neither JP nor KP wa s a ch i d of petitioner as defined i n section 152(f)(1) . On tha t record, we further find that for his taxable year 200 6 neithe r 1P nor KP is a qualifying child of petitione r as defined in sect i on 152(c) and that there- .fore neither is hi s dependent under-se c ion 152(a)(1) . We turn next to whether for petit i ner's taxable year 2006 JP and KP are his qualifying relatives and therefore are hi s dependents because they are described i 1 a subparagraph of section 152(d)(2) other than section 1 5 2(d) (2) (H) .4 Section 152(d) defines the t.erm "qualifying re l ative" as follows : SEC . 152 . DEPENDENT DEFINED . (d) Qualifying Relative .--For purposes of thi s section-- (1) In general .--The term "qualifying rela- tive" means, with respect to taxable year, an individual-- any taxpayer for an y . . (A) who bears a rel taxpayer described in p a ationship to the ragraph (2) , (B) whose gross inc year in which such taxab less than the exemption section 151(d)) , ome for the calendar le year begins is amount (as defined i n 41t is sec . 152(d) (2) (H) on which dent's concession that JP and KP are pe relatives and therefore are his depende espondent bases respontitioner's qualifying nts (C) 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, an d (D) who is not a qualifying child of such taxpayer or of any other taxpayer for any taxable year beginning in the calendar year in which such taxable year begins . As pertinent here, section 152(d)(2) provides that an~ individual bears a relationship to the taxpayer for purposes of section 152(d)(1)(A) if the individual is : (A) A child or a descendant of a child . * (H) An individual (other than * * * the spous e * * * of the taxpayer) 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 . We have found that during 2006 neither JP nor KP was a child of petitioner as defined in section 152(f)(1) .5 On the record before us, we find that for petitioner's taxable year 2006 neither JP nor KP is petitioner's qualifying relative by reason of section 152 (d) (2) (A). 4 ' Petitioner does not claim, and the record does not estab- lish, that JP or KP is (1) petitioner's sister or stepsister , (2) his mother or an ancestor of his mother, (3) his stepmother, (4) a daughter of petitioner's brother or sister, (5) a sister o f 5As discussed above , for purposes of sec . 152 . .sec . 152 ( f)(1) defines the term."child" petitioner's father or mother, or (6) p titioner's daughter-in- law, sister:-in-law, or mother-in-law . ee sec . 152 (d) ( 2) (B) - (G) Based upon our findings and respon ent's concession that fo r petitioner's taxable year 2006 JP and K P are his qualifyin g relatives under section 152(d)(2)(H), w find that for that year neither JP nor KP would be petitioner's dependent but for sectio n 152 (d) (2) (H) . We further find that pu r suant to sectio n 2(b)(3)(B)(i) petitioner is not entitle for that year to head o f household filing status under section 2I(b) . Child Care Credi t Section 21(a) allows a taxpayer a credit for a certain percentage of employment-related expenses incurred to enable th e taxpayer to be employed gainfully, including expenses for the . care of a qualifying individual . See sec . 21(a) and (b)(2) . pertinent here, section 21(b)(1) defines the term "qualifying individual" to mean : SEC . 21 . EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE SERVICES NECESSARY FOR GAINFUL EMPLOYMENT .- (b) Definitions of Qualifyin Employment-Related Expenses .--For section-- Individual and purposes of thi s (1) Qualifying individual .--The term "quali- fying individual" means- (A) a dependent of the taxpayer (as defined in section 152( )(1)) who has not attained age 13, [or ] (B) a dependent of the taxpayer (as defined in section 152, determined without - 10 - regard to subsections (b)(1), (b)(2), and (d)(1)(B)) who is physically or mentally incapable of caring for himself or herself and who has the same principal place of abode as the taxpayer for more than one-half of f such taxable year * * * We have found that for his taxable year 2006 neither' JP nor KP is a qualifying child of petitioner as defined in section 152(c) and that therefore neither is his dependent under section 152(a)(1) . On the record before us, we find that for pet i tioner's taxable year 2006 neither JP nor KP is a'qualifyin g individual as defined in section 21(b)(1)(A) with respect to petitioner . Although respondent concedes that for petitioner's taxable . year 2006 JP and KP are petitioner's dependents under section 152(a)(2), we have found that neither JP nor KP suffered from any physical or mental impairment during that year . In addition, the record does not establish that JP or KP was physically ors men- tally incapable of caring for herself . On the record before us, we find that for petitioner's taxable year 2006 neither JP nor KP is a qualifying individual as defined in section 21(b)(1)(B) with respect to petitioner . On the 'record before us, we find that petitioner is-not entitled for his taxable year 2006 to the child care credit under section 21(a) . Additional Child Tax Credi t Section 24(a) provides a credit wi fying child of the taxpayer . Section 2 "qualifying child" as "a qualifying chi d of the taxpayer (as defined in section .152(c)) who has no t ttained age -17 . " 6 The child tax credit may not excee the taxpayer's regula r tax liability . Sec . 24(b)(3) . . Where a taxpayer is eligible for the child tax credit, but the taxpaye r regular tax liability i s less than the amount of the child tax c edit potentially avail- able under section 24(a), section 24(d) makes a portion of th e credit, known as the additional child t x :credit, refundable . We have found that for his taxable year 2006 neither JP no r KP is a qualifying child of petitioner defined in sectio n 152(c) . On the record .before us, we f i d that for that yea r neither JP nor KP is a qualifying child of petitioner as defined in section 24(c) . On that record, we f rther find that peti- tioner,is not entitled for his taxable ear 2006 to .the child ta x credit under section 24(a)' and that th refore he is not entitle d 'The parties do not dispute that and KP were both under age 17 at the close of petitionerls taxable year 2006 and that therefore each satisfies the age restriction in sec . 24(c)(1) . j 7In the 2006 tax return, petitione did not claim the child tax credit ; he claimed only the'additio al child tax credit because he reported in that return a total tax liability of zero . a for that year to the additional child tax credit under section 12 - 24 (d) . Earned Income Tax Credi t Section 32(a)(1) permits an eligible individual an earne d income credit against that individual's tax liability .8 As pertinent here, .the,term "eligible individual" is defined to mea n ."any individual who has=a qualifying, child for the taxable year" . Sec . 32(c) (1) (A) (i) . Section 32(c) (3) (A) defines the term "qualifying child" to mean "a qualifying child of the taxpayer (as defined in section 152(c) * * *) . " We have found that for his taxable year 2006 neither JP nor KP is a qualifying child of petitioner as defined in section 152(c) . On the record before us, we find that for that year neither JP nor KP is a qualifying child of-petitioner .-as,.-define d in section 32(c)(3)(A) . On . that record, we further find that for his taxable year 2006 petitioner is not an eligible individual a s defined . in section 32(c)(1)(A)(i) . On the record before us, we find that petitioner is not entitled for his taxable year 2006 to the earned income tax credit under section 32(a) . 9 'The amount of the credit is determined based on percentages that vary depending on whether the taxpayer has one qualifying child, two or more qualifying children, or no qualifying''~children . Sec . 32(b) . The credit is also subject to a limitation based on adjusted gross income . Sec . 32(a)(2) . See infra note 9 . 9Assuming arguendo that petitioner were an eligible±individ- . .) (continued . - 13 - We have considered all of petitioner's contentions and arguments that are not discussed herein, and we find them to be without merit, irrelevant, and/or moot . To reflect the foregoing and the oncession of respondent , cision will be entere d under ule 155 . 9( . . .continued) ual as defined . in sec . 32 (c) (1) (A) (ii) he nonetheless would not be entitled t credit for that year . That is because adjusted gross income for his taxable 32(a)(2) completely phases out the ear an eligible individual with no qualify taxpayer has adjusted gross income in taxable year 2006 . . See Rev . Proc . 200 C .B . 979, 982 . for his taxable year 2006, the earned income ta x petitioner reporte d ear 2006 of $21,025 . Sec . ed income tax credit for ng children where the xcess of $12,120 for the -70, sec . 3 .06(1), 2005-2