TAX COURT OPINION

Case: Kevin Wayne Bartig
Docket Number: 3255-17S
Judge: Leyden
Opinion Type: bench
Filed: 02/15/2018
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 DRC KEVIN WAYNE BARTIG, Petitioner, v. ) ) ) ) Docket No. 3255-17S. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ORDER 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 the pages of the transcript of the trial in the above case before Special Trial Judge Diana L. Leyden at San Diego, California, on January 31, 2018, containing her 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, a decision will be entered for petitioner. Dated: Washington, D.C. February 15, 2018 (Signed) Diana L. Leyden Special Trial Judge SERVED Feb 20 2018 3 1 2 3 4 5 6 7 8 9 10 11 12 Bench Opinion by Special Trial Judge Diana L. Leyden January 31, 2018 Kevin Wayne Bartig v. Commissioner of Internal Revenue Docket No. 3255-17S 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. See Rule 152(c), Tax Court Rules of Practice and Procedure. This proceeding was heard as a Small Tax Case pursuant to the provisions of section 7463 of the Internal 13 Revenue Code of 1986, as amended, and Rules 170 through 14 15 175 of the Tax Court Rules of Practice and Procedure. 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 Tax 18 Court Rules of Practice and Procedure. 19 20 21 22 Hereinafter in this bench opinion, all section references are to the Internal Revenue Code, as amended and in effect for the relevant times, and all Rule references are to the Tax Court Rules of Practice and 23 Procedure. 24 The Court uses the term "Internal Revenue 25 Service" or "IRS" to refer to administrative actions taken 73)406-2250|operationseescolbetsmetlwwwascribersnet 1 2 3 4 5 6 7 8 9 outside of these proceedings. The Court uses the term "respondent" to refer to the Commissioner of Internal Revenue, who is the head of the IRS and is respondent in this case, and to refer to actions taken in connection with this case. At the time of trial, petitioner's son, for. whom he claimed a dependency exemption deduction, was 19 years old. Therefore, we will refer to him by his first name, Xavier. The trial of this case was conducted on January 10 29, 2018, in San Diego, California. Petitioner appeared 11 12 13 14 15 16 on his own behalf. Min Chan appeared on behalf of respondent. In a notice of deficiency dated November 21, 2016,.the IRS determined the deficiency in petitioner's 2014 Federal income tax of $1,842. The issues for decision by the Court are: (1) 17 whether= petitioner is entitled to a dependency exemption 18 deduction for his son, Xavier, for 2014. and (2) whether 19 petitioner is entitled to claim the filing status of head 20 of household for 2014. The parties agree that both issues 21 22 hinge upon whether Xavier lived with petitioner for more than one.half of the year during 2014. If so, then the 23 parties agree that Xavier was the qualifying child of 24 petitioner and that petitioner was entitled to claim,hg a 25 dependency exemption deduction for Xavier and the filing . 5 1 2 3 4 5 6 7 8 status of head household for 2014. Some of the facts are stipulated and are so found. The stipulation of facts and the.attached exhibits are incorporated herein by this reference. Petitioner resided in the State of California at the time he timely filed the petition with the Court. . . During 2014, petitioner and Xavier's mother, Tisha Arthur, had an unwritten agreement whereby Xavier 9. would live with petitioner two days a week, (Monday and 10 Wednesday), every other weekend (Friday, Saturday, and 11 Sunday nights), the week of the Fourth of July, and from 12 December 22 through December 30, 2014, for Christmas. If 13 petitioner had to travel or had other plans during a 14 weekend he was scheduled to have Xavier, Ms. Arthur would 15 16 17 18 switch a weekend with petitioner. Petitioner timely filed his Federal individual income tax return for 2014. On that tax return, he claimed the filing status of head of household and claimed 19 a dependency exemption deduction for Xavier. In the 20 notice of deficiency, the IRS disallowed the head of 21 22 23 household filing status and the dependency exemption deduction for Xavier. Ms. Arthur testified, but did not present other 24 proof, that she also claimed a dependency exemption 25 deduction for Xavier for 2014, that her 2014 tax return (973) 40Á-2 250] operations@escribersmt| vMw.escribers iet 6 was also audited, and that the IRS allowed her to claim a dependency exemption deduction for Xavier for 2014. Respondent did not challenge this testimony. Generally, the Commissioner's determination of a deficiency is presumed correct, and the taxpayer bears the burden of proving it incorrect. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). Moreover, deductions are a matter of legislative grace, and the taxpayer bears the burden of proving entitlement to any deduction claimed. INDOPCO Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Under section 7491(a), the burden of proof may 1 2 3 4 5 6 7 8 9 10 11 12 13 14 shift to the Commissioner if the taxpayer produces 15 16 17 18 credible evidence with respect to any relevant factual issue and meets other requirements. Petitioner has not argued that section 7491(a) applies nor established that its requirements are met. The burden of proof remains 19 with petitioner. 20 21 22 23 24 A. Dependency Exemption Deduction for Xavier A taxpayer is entitled to deduct an exemption for each individual who is a dependent of the taxpayer for the taxable year. Sec. 151(a), (c). A dependent as used in section 151 means the taxpayer's qualifying child or 25 qualifying relative. Sec. 152(a). 51ElllFI (973) 406.2250|operationseescribers.netj www.escribers.net Section 152(c)(1) defines a qualifying child as 7 a child who (1) bears a specified relationship to the taxpayer, (2) who lived with the taxpayer for more than one-half of the tax year at issue, and (3) who did not provide more than one-half of his or her own support during the year. These requirements can loosely be stated as the relationship test, the residency test, the age test, and the support test. A son of a taxpayer satisfies the relationship test. Sece±en 152(c)(2). To meet the age test, the qualifying child must be younger than the taxpayer and either be less than 19 years old or a student who is less than 24 years old, or permanently and-totally 1 2 3 4 5 6 7 8 9 10 11 12 13 disabled. Sec. 152(c)(3). The requirements are in the 14 15 16 conjunctive, and all must be satisfied. Respondent conceded that Xavier is petitioner's son, that he was under the age of 19 in 2014, and that 17 Xavier did not provide more than one-half of his support 18 19 20 during 2014 (i.e., that petitioner satisfied the relationship test, the age test, and the support test). The only requirement that respondent challenges is that 21 Xavier lived with petitioner for more than one-half of the 22 23 24 year. Although Ms. Arthur asserted that she claimed a dependency exemption deduction for Xavier for 2014, she 25 did not disagree with petitioner as to the terms of their (973)406-2250]operationseescribers.net|www.escribers.net 1 2 3 4 informal custody agreement in effect during 2014. In fact, petitioner and Ms. Arthur both testified that they had difficulties agreeing to who should claim the child and that ultimately they agreed informally and not in 5 writing on the arrangement of two days a week, every other 6 7 8 9 10 11 weekend, and the noted weeks in July and December. On the basis of petitioner and Ms. Arthur's unwritten agreement and the testimony of petitioner, Ms. Arthur, petitioner's current wife, Larissa Bartig, and Xavier, the Court finds that Xavier lived with petitioner for 198 days. The Court takes judicial notice that there were 365 days in 2014. 12 More than one-half of that number of days is 183 days. 13 Petitioner therefore satisfies the residency test because 14 Xavier resided with petitioner for more than one-half of 15 16 17 18 2014. To the extent Ms. Arthur's testimony can be construed to mean that she asserts that Xavier lived with her for more than one-half of 2014 despite her and 19 petitioner's informal agreement, the Court is not 20 persuaded by her testimony. After observing the testimony 21 of petitioner, Ms. Arthur, Ms. Bartig, and Xavier, the 22 Court finds petitioner's testimony about the informal 23 24 25 agreement and about Xavier's activities and personal needs during 2014 to be credible. Petitioner also provided school records for 2014 that list his address as Xavier's Cribers $73)406-2250|operationseescrbetsmet|www.escribers.net . 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 address and dental records that also list his address as Xavier's address. Ms. Arthur testified that petitioner brought Xavier to dentist appointments and that petitioner, who was an engineer during 2014, had a more flexible schedule. The parties have not argued that petitioner executed a Form 8332 for 2014 to release the dependency exemption etaim to Ms. Arthur for that year. See Sec. 152(e). Accordingly, the petitioner is entitled to claim a dependency exemption deduction for Xavier for 2014. B. Head of Household Filing Status In order to qualify for head of household filing status under section 2(b), a taxpayer must satisfy the following requirements: (1) the taxpayer is unmarried at the close of the taxable year or a surviving spouse for that year; (2) the taxpayer must maintain as his/her home a household that constitutes the principal place of abode 18 of a qualifying child within the meaning of section 152(c) 19 20 21 22 or of any other person who is a dependent of the taxpayer under section 151; and (3) the taxpayer must furnish more than half of the cost of maintaining the household during the relevant taxable year. The cost of maintaining the 23 household includes expenses incurred for the mutual 24 benefit of the persons living in the household such as 25 rent or mortgage payments, property taxes, property (973)406-2250|operationseestrbersmet|wwwascrbers.net 10 1 2 3 4 5 6 7 8 9 insurance, utility charges, upkeep and repairs, and food consumed on the premises. Sec. 1.2-2(d), Income Tax Regs. Respondent conceded that all the requirements for head of household, except the residency requirement, had been met. Having found that Xavier lived with petitioner for more than one-half of the year, the Court concludes that petitioner is entitled to claim head of }Ú / household filing status for 2014. In order to give effect to our disposition of 10 the disputed issues, decision will be entered for 11 petitioner. 12 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT 13 AND OPINION IN THIS CASE. 14 15 16 17 18 19 20 21 22 23 24 25 (Whereupon, at 10:07 a.m., the above-entitled matter was concluded.) 73)406-2250|operationseescribersmetlwww.escribers.net