TAX COURT OPINION

Case: Abdullahi Muse
Docket Number: 3078-16S
Judge: Leyden
Opinion Type: bench
Filed: 12/27/2016
Pages: 10

RS UNITED STATES TAX COURT WASHINGTON, DC 20217 ABDULLAHI MUSE, Petitioner, v. ) ) ) ) Docket No. 3078-16S. 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 November 17, 2016, containing her oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. Dated: Washington, D.C. December 27, 2016 (Signed) Diana L. Leyden Special Trial Judge SERVED Dec 27 2016 Capital Reporting Company 3 1 2 Bench Opinion by Special Trial Judge Diana L. Leyden November 17, 2016 3 Abdullahi Muse v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Docket No. 3078-16S I. 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. 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 Practice and Procedure. III. This bench opinion is made pursuant to the authority granted by Section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Hereinafter in this bench opinion, and unless otherwise indicated, all section numbers refer 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company to the Internal Revenue Code, as amended and in effect for the taxable year in issue, and all Rule numbers refer to the Tax Court Rules of Practice and 4 Procedure IV. The trial of this case was conducted on November 15, 2016, in San Diego, California. 1 2 3 4 5 6 7 8 Petitioner appeared on his own behalf. And Mr. 9 Nurein Johar was recognized by the Court to interpret 10 11 12 for petitioner. Petitioner's first language is Somali. Elizabeth Loter, a law student, appeared on behalf of respondent. Under Rule 24(a)(5), Special 13 Trial Judge Diana L. Leyden granted permission for 14 15 16 17 18 19 20 21 22 23 24 Ms. Loter to assist by presenting the respondent's case at the trial. Ms. Loter was supervised by respondent's counsel Clint Hale. V. For the taxable year 2014, respondent determined a deficiency of $8,107 with respect to petitioner's 2014 federal income tax. VI. The issues for decision before the Court are (1) whether petitioner is entitled to a dependency exemption deduction for his three then 25 minor children; (2) whether petitioner is entitled to 866.488.DEPO www.CapitalReportingCompany.com - Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 claim the filing status of head of household; (3) whether petitioner is entitled to claim the earned income credit; and (4) whether petitioner is entitled to claim the additional child tax credit. VII. Some of the facts have been stipulated. The parties' stipulation of facts was admitted in evidence along with the attached exhibits. The stipulation of facts, with the attached exhibits, is incorporated herein by this reference. Petitioner resided in California at the time the petition was filed with the Court. The taxable year at issue in this case is the calendar year 2014. At trial petitioner testified that during 2014, the three minor children that he claimed as dependents lived in Somalia from January 1, 2014, through March 31, 2014, and in Ethiopia from March 31, 2014, through December 31, 2014. Petitioner conceded that he lived in the United States during 2014 and that the minor children never lived with him in the United States at any time during 2014. 23 Petitioner testified that he sent money to the 24 25 children to help support them. Petitioner testified that his three 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 children claimed o his 2014 tax return had social security numbers. However, they were never residents of the United States in 2014. Petitioner timely filed his 2014 tax return. On his tax return petitioner claimed the filing status of head of household, three dependency exemption deductions for his three minor children, the earned income credit computed by treating each of his three children as a qualifying child, and the additional child tax credit computed by treating each of his three children as a qualifying child. On December 14, 2015, respondent sent petitioner a notice of deficiency dis-allowing the filing status of head of household and changing the filing status to single, disallowing dependency exemption deductions for his three children, disallowing the earned income credit, and disallowing the addition child tax credit. Petitioner timely petitioned this Court for a redetermination of the deficiency. VIII. We now turn to the substantive law. 23 Generally, determinations made in a notice of 24 25 deficiency are presumed correct, and the taxpayer bears the burden of proving the Commissioner's 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 determinations are erroneous. Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). Under certain circumstances the burden of proof with respect to the factual issues may shift to the Commissioner under Section 7491(a). Petitioner does not contend, and the evidence does not establish, that the burden of proof.shifts to respondent under Section 7491(a) as to any issue of fact. Petitioner bears the burden of proof. A. Dependency Exemption Deduction Because of its impact on the other three issues, we begin our discussion with petitioner's 13 . entitlement to the dependency exemption deductions 14 15 16 17 18 19 20 21 22 23 24 25 claimed for his three children. In general a taxpayer is entitled to an exemption deduction 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 qualifying relative. Sec. 152(a). In order to claim a dependent as a qualifying child, as defined in Section 152(c), or a qualifying relative, as defined in Section 152(d), an individual must first meet certain threshold requirements. As relevant in this case, a dependent "does not include an individual who is not a citizen 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 or national of the United States unless such individual is a resident of the United States or a country contiguous to the United States." Sec. 152(b)(3) (A). Petitioner testified at trial that his three children had social security numbers at the time his return was filed. We understand petitioner's testimony to mean that his three children became citizens of the United States in 10 2015. Because his children were not citizens of the 11 United States in 2014, petitioner's three children 12 13 14 15 16 17 18 either needed to be residents of the United States or residents of a·country contiguous to the United States in 2014 to qualify as dependents. See sec. 152(b)(3) (A). Petitioner testified at trial that his three children resided in Somalia from January 1, 2014, to March 31, 2014, and resided in Ethiopia from 19 March 31, 2014, to December 31, 2014. Petitioner's 20 21 22 23 24 25 three children did not reside in the United States any time in 2014. The children also did not reside in a country contiguous to the United States (i.e., Canada or Mexico) at any time in 2014. Petitioner's three children therefore do not meet a threshold requirement to qualify as dependents under Section 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 152(c) or (d) for 2014. Accordingly, the Court concludes that petitioner is not entitled to dependency exemption deductions for his three children for 2014. Respondent's disallowances of those dependency exemption deductions are sustained. B. Head of Household Filing Status Section 2(b)(1) defines head of household. To qualify, and as relevant in this case, the taxpayer must maintain as his home a household that constitutes for more than one-half of the year the principal place of abode of either (1) a qualifying child as defined in Section 152(c) or (2) any other person who is a dependent of the .taxpayer for purposes of Section 151. As discussed above, petitioner's three 16 minor children do not meet the definition of 17 18 19 20 21 22 23 24 25 dependent. Respondent's disallowance of the filing status of head of household is sustained. C. Earned Income Credit Section 32 allows an earned income credit for an eligible individual. An eligible individual is (a) a person who has a "qualifying child," or (b) a person between the ages of 25 and 65 who resided in the United States for more than one-half of the taxable year and who was not a dependent on another 866.488.DEPO www.CapitalReportingCompany.com . Capital Reporting Company 10 1 2 3 4 taxpayer's tax return. Sec. 32(c)(1) (A). The term "qualifying child" has the same meaning for purposes of both Section 152(c) and Section 32. Sec. 32(c)(3). To be a qualifying child, a child must 5 meet the definition of a dependent. Petitioner's 6 three minor children do not meet that definition. 7 Consequently, the Court sustains respondent's 8 determination disallowing the earned income credit 9 with respect to petitioner's three children for 2014. 10 11 12 13 14 15 16 17 18 19 20 21 D. Additional Child Tax Credit In general and subject to various conditions and limitations, a taxpayer is entitled to a child tax credit (including an additional child tax credit) with respect to each qualifying child of the taxpayer. Sec. 24(a). The term "qualifying child" as used in Sec. 24 means an individual who has not attained the age of 17, and who otherwise fits the definition of a qualifying child as defined in Section 152(c). Sec. 24(c). To be a qualifying child, the child must satisfy the definition of dependent. Petitioner's three minor children do not 22 meet that definition. Accordingly, the Court 23 24 25 sustains respondent's determination disallowing the additional child tax credit with respect to petitioner's three children for 2014. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company IX. 11 To give effect to our disposition of the disputed issues, decision will be entered for respondent. X. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 10:51 a.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