TAX COURT OPINION

Case: John Henry Allen, Sr.
Docket Number: 2733-12S
Judge: Whalen
Opinion Type: bench
Filed: 05/16/2013
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 JOHN HENRY ALLEN, SR., Petitioner, V. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) ) ORDER Docket No. 2733-12S 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 proceedings in the above-case before the undersigned at Jacksonville, Florida, containing the oral findings of fact and opinion rendered on May 1, 2013. In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Laurence J. Whalen Judge Dated: Washington, D.C. May 16, 2013 SERVED MAY 1 6 200 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Bench Opinion by Judge Laurence J. Whalen May 1, 2013 John Henry Allen, Sr. v. Commissioner Docket No. 2733-12S · . . . .I.. 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. II. This proceeding was heard as a Small Tax Case pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 175 of the Tax Court Rules of 15 Practice and Procedure. Hereinafter in this bench 16 17 18 19 20 21 22 23 24 25 opinion, all section,,references are to the Internal Revenue Code, as amended and in effect for the taxable year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Pursuant to section 7463(b), the decision to be entered in this case cannot be reviewed in any other court, and this bench opinion shall not be treated as precedent for any other case. III. This bench opinion is made pursuant to the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 authority granted by section 7459(b) and Rule 152. IV. John Henry Allen, Sr. appeared in these proceedings on his own behalf, and Christopher A. 5 Pavilonis, Esquire, appeared on behalf of Respondent. 6 7 8 V. Respondent issued a notice of deficiency to petitioner in which he determined a deficiency in 9 petitioner's Federal income tax for taxable year 2010 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in the amount of $7,376. In that notice, respondent made the following five adjustments to the tax reported on petitioner's return: First, respondent changed petitioner's filing status from head of household to single; second, respondent disallowed the dependency exemptions claimed for petitioner's son and for his two grand nieces; t e, respondent disallowed the earned income credit claimed by petitioner; fzfr, respondent disallowed the child tax L.. bd credit claimed by petitioner; and fifth, respondent disallowed the additional child tax credit claimed by petitioner. After concessions by the parties, there are two issues for decision: first, whether petitioner is entitled to the head of household filing status, and second, whether petitioner is entitled to the 866.488.DEPO www.CapitalReportingCompany.com 1 Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 earned income credit claimed on his return for taxable year 2010. VI. Some of the facts were deemed stipulated for purposes of this case after the Order to Show Cause issued by the Court pursuant to Rule 91(f) was made absolute by the Order of the Court dated April 22, 2013. Petitioner resided at 401 East Roger 10 Street, Adel, Georgia, when he filed his petition in 11 12 13 14 15 16 17 18 19 20 21 22 23 this case. He resided at that same residence during taxable year 2010. During that year he was married to Ms. Shamarel M. Allen. The renewal of the lease of his residence on East Roger Street for a six-month term, which was executed on June 11, 2010, states that the premises were to be occupied during the renewal period by petitioner and his wife, Ms. Allen, among other persons. The school registration for petitioner's son shows that petitioner and his wife resided with their son at the 401 East Roger Street address, during the 2010-2011 school year. Significantly, during 2010 petitioner's wife used the 401 East Roger 24 Street address as the address on her Georgia driver's 25 license. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 VII. The definition of head of household, set forth in section 2 (b), states, among other things, that the taxpayer shall be considered a head of household only if "such individual is not married at the close of his taxable year". Section 2 (c) provides that "an individual shall be treated as not 8 married at the close of the taxable year if such 9 individual is so treated under the provisions of 10 11 12 13 14 15 16 17 18 19 20 21 22 23 section 7703 (b) . " Similarly, for purposes of the earned income credit, section 32(d) provides, among other requirements, that "in the case of an individual who is married (within the meaning of section 7703), this section shall apply only if a joint return is filed for the taxable year under section 6013. " See sec. 1.32-2 (b) (2), Income Tax Regs. If the individual is treated as not married under the provisions of section 7703(b), then a joint return is not required. By reason of the above provisions, in order to determine petitioner's eligibility both for head of household filing status, and for the earned income credit, it is necessary to determine petitioner's 24 marital status under section 7703. See secs. 2(c), 25 32(d). During 2010, petitioner was not legally 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company I 7 1 separated under a decree of divo.rce or separate 2 maintenance. See sec. 7703(a). Notwithstanding that 3 4 5 6 7 8 9 10 11 12 13 14 15 fact, section 7703(b) provides that certain married individuals who live in separate households may be treated as not married at the end of the taxable year. Sec. 7703(b). For a married individual to be treated by section 7703(b) as not married, three requirements must be met. In this case, as we understand it, the parties only disagree about the third requirement of section 7703(b), that is, "during the last six months of the taxable year, such individual's spouse is not a member of * * * [the individual's] household". Sec. 7703(b) (3), see Treas. Reg. § 1.7703-1(b) (5). The remaining issues in this case turn on the factual question whether 16 petitioner's wife maintained a separate residence 17 18 19 20 21 22 23 24 from her husband during the last six months of 2010. VIII. We begin with several fundamental principles of tax litigation. First, as a general rule, the Commissioner's determinations are presumed correct, and the taxpayer bears the burden of proving that those determinations are erroneous. Rule 142 (a). This principle was firmly established by the 25 United States Supreme Court as early as 1933 and has 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 been reaffirmed by the Supreme Court more recently. See INDOPCO Inc. v. Commissioner, 503 U.S. 79, 84 (1992) . Although section 7491(a) may serve to shift the burden o proof to the Commissioner under certain circumstances, it does not do so here for at least three independent reason Petitioner failed to raise the matter; petitioner failed to comply with all record keeping and substantiation requirements, see sec . 7491 (a ) (2) (A) and (B) ; and petitioner failed to introduce the quality of evidence required by sec. 7491(a) (1). Accordingly, petitioner bears the burden of proof. Second, deductions and credits are a matter of legislative grace, and the taxpayer bears the burden of proving that he or she is entitled to any tax benefit claimed. Rule 142(a); Deputy v. duPont, 308 U.S. 488, 493 (1940); New Colonial Ice Co. v. 19 Helvering, 292 U.S. 435, 440 (1934). This includes 20 the burden of substantiation. Hradesky v. 21 22 23 24 25 Commissioner, 65 T.C. 87, 90 (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976). Third, the Court is not bound to accept the unverified and undocumented testimony of a taxpayer. Hradesky v. Commissioner, supra; Tokarski v. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 Commissioner, 87 T.C. 74, 77 (1986). Fourth, a party's failure to introduce documentary evidence which is within his possession or control, and which, if true, would be favorable to him, gives rise to the presumption that, if produced, such evidence would be unfavorable. Recklitis v. Commissioner, 91 T.C. 874, 890 (1988); Pollack v. Commissioner, 47 T.C. 92, 108 (1966), affd. 392 F.2d 409 (5th Cir. 1968); Wichita Terminal Elevator Co. v. Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513 (10th Cir., 1947). IX. Discussion: Petitioner testified at trial that he was separated from his wife during 2010. His testimony was brief and included no other facts or details about the couple's living arrangements. Petitioner's wife also testified that she was separated from petitioner during the entire year 2010. She said that petitioner had kept their son 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 with him during the year, and she had kept their 21 22 23 24 25 daughter with her. Her testimony, like her husband's testimony, was vague and included no details about the couple's living arrangements. On cross examination, petitioner's wife could not point to any financial records, such as bank statements, credit 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 card bills, automobile insurance bills, or the like, that were mailed to her during 2010 at a residence that was not her husband's residence. It is significant that neither petitioner nor his wife sought to introduce evidence of any payments, such as rent payments or mortgage payments, that had been made by petitioner's wife during 2010 for a separate abode. If any such evidence existed, it would have easily, and forcibly, corroborated their testimony that they had maintained separate residences during 2010. It is also significant that the address for petitioner's wife listed on her son's school registration, and the address on her Florida driver's license, was her husband's address. After hearing petitioner and his wife C testify, and after evaluating their credibility, we do not credit their testimony that they each had 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 maintained a separate residence during the year 2010. 19 20 21 22 23 24 25 Based upon our evaluation of the record in this case, we find that petitioner and his wife did not maintain separate residences during 2010, and that petitioner's wife was a member of petitioner's household. Accordingly, for taxable year 2010, petitioner is considered married. See section 7703(b). As a result, petitioner is not eligible for 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company head of household filing status. See sec. 2(b) (1). Furthermore, because petitioner was married, but did not file a joint return for taxable year 2010, he is not entitled to the earned income credit under 11 section 32(a). Sec. 32(d). X. In order to give effect to our disposition of the disputed issues, decision will be entered under Rule 155. XI. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 4:16 p.m., the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com