TAX COURT OPINION

Case: Robinette V. Wilburn
Docket Number: 16825-11S
Judge: Armen
Opinion Type: bench
Filed: 05/15/2012
Pages: 12

UNITED STATES TAX COURT WASHINGTON, DC 20217 ROBINETTE V. WILBURN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ORDER Docket No. 16825-11S. , 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 of the above case before Special Trial Judge Robert N. Armen, Jr. at Dallas, Texas, on May 1, 2012, containing his oral fmdings of fact and opinion rend red at the conclusion of the trial. It is further ORDERED that, in addition to regular service of this Order on the parties, the Clerk of the Court is directed to serve a copy of this Or er and a copy of the pages of the transcript containing the oral findings of fact and opinion, on Bob Probasco at "Thompson & Knight LLP, 1722 Routh Street, Suite 1500, Dallas, Texas 75201". In accordance with the oral findings of fact and opinipn, a Decision will be entered for respondent. (Signed) Robert N. Armen, Jr. Special Trial Judge Dated: Washington, D.C. May 15, 2012 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 Bench Opinion By Special Trial Judge Robert N. Armen, Jr. Wilburn v. Commissioner Docket No. : 16825-11S 3 May 1, 2012 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 am nded, and Rules 170 through 175 of the Tax Court RulÅs of Practice and Procedure . III. This bench opinion is made pursuant to the authority granted by se.ction 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 o inion, all section numbers refer to the Internal Revenue Code, as Heritage Reporting Corpor tion (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 amended and in effect for 2009, the taxable year in issue, and all Rule numbers refer to the Tax Court Rules of Practice and Procedure. IV. Robinette V. Wilburn appeared and was assisted by Robert Probasco, who was specially recognized. Heather L. Lampert appeared on behalf of respondent . V. Respondent determined a deficiency in petitioner's Federal income tax for 2009 in the amount of $7,528. Respondent did not determine, nor subsequently assert, any penalty against petitioner. Thus, only the deficiency in tax is at issue in this case. VI. Some of the facts have been stipulated, and they are so found. Petitioner resided in the State of Texas at the time that the petition was filed. Petitioner, a teacher, timely filed a Federal income tax return for 2009. . On her return, petitioner listed her filing status as head-of-household, and she claimed three dependency exemption deductions, one for her adult 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 5 daughter, Andrale, one for her grandson, KCC (Andrale's son and a minor born in 2006), and one for her granddaughter, ARC (Andrale's daughter and a minor born in 2007). (We note parenthetically that for. privacy considerations, the Court uses only initials, and not names, of minor children and only birth years, and not birth dates. Rule 27(a) (2), (3).) Petitioner properly reported her wage income on her return, but the amount thereof was eclipsed by the sum of her standard deduction and her exemptions, thereby resulting in no reported tax. Petitioner then claimed a refund of $7,048, consisting principally of an earned income credit of $4,532 and an additional child tax credit of $2,000. (The balance consisted of withheld income tax of $116 and the making-work-pay credit of $400.) In support of the earned income credit and the additional child tax credit, petitioner attached to her return (1) Schedule EIC ("Earned Income Credit-Qualifying Child Information"), identifying KCC and ARC as her qualifying children, and (2) Form 8812 ("Additional Child Tax Credit"). In the notice of deficiency', respondent disallowed the three dependency exemption deductions claimed by petitioner. Respondent also disallowed the earned income credit and the additional child tax 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 credit. Finally, respondent changed petitioner's filing status from head-of-household to single, which adjustment also served to decrease !the allowable amount of petitioner's standard deduction. Respondent disallowed the, dependency exemption deduction for petitioner's daughter on the ground that Andrale had filed a.joint return for 2009. Respondent disallowed the dependency exemption deductions for petitioner's two grandchildren on the ground that they had been claimed as dependents on their parent's return, i.e., on the joint return filed by Andrale. At trial, petitioner acknowledged that Andrale was married to Robert Coleman and that KCC and ARC were the couple's children. Also at trial, respondent introduced records showing that a joint return had been filed for 2009 by Robert and Andrale Coleman, which return claimed dependency exemption deductions for KCC and ARC, as well as an earned income credit of $5,657. At the time that petitioner filed her return for 2009, she did not know that Andrale had filed a joint return with Robert Coleman for that year, nor did she know that KCC and ARC were claimed as dependents on that return. Indeed, for most of 2009, 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 Andrale, together with KCC and ARC, lived with petitioner, and it was petitioner who provided the majority of support for the household. (In 2008, domestic discord had caused Andrale to leave her marital home . ) However, in November 20 09, Andrale, together with KCC and ARC, parted ways with petitioner for reasons not expressly made clear in the record but which appear to have been related to the desire to reconcile with Robert Coleman. Andrale's decision to leave petitioner's household was hurtful to petitioner, and her relationship with her daughter suffered as a consequence. Dependency Exemption Deductions VII. In the case of an individual, the exemptions provided by section 151 are allowed as deductions in comput ing t axable income . Se c . 151 (a) . Included within the universe of possible exemptions are those f or a t axpayer ' s dependent s as de f ined by se ct ion 152 . As relevant herein, the term "dependent " means a "qualifying child" . Sec . 152 (a) . However, before going on to define "qualifying child", section 152(b) (2) makes clear that an individual shall not be treated as a dependent of a taxpayer if such individual has made a joint return with the 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 individual's spouse for the same taxable year. What this means is that petitioner may not, as a matter of law, claim Andrale as a dependent for 2009 because a joint return was filed by Andrale and Robert Coleman for that year. Next we consider the status of KCC and ARC. Clearly, each appears to be a "qualifying child" with respect to petitioner, their grandmóther, as each child satisfies the tests prescribed by section 152(c) (1) regarding relationship, abode, age, and the like. However, each also is a "qualifying child" with respect · to Andrale, their mother . Under these circumstances, section 152 (c) (4) (A) (f)' prescribes a special rule relating to 2 or more taxpayers who can claim the same qualifying child. As applicable herein, this special rule provides that if (but.for the special rule) an individual (such as KCC or ARC) may be claimed as a qualifying child by 2 or more taxpayers for the same taxable year, such individual shall be treated as the qualifying child of the taxpayer who is the parent of the individual. What this means is that petitioner may not, as a matter of law, claim either KCC or ARC as a dependent for 2009 because Andrale is entitled to claim them, and did in fact do so, on the joint return filed·by her and 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 Robert Coleman for that year. Cf. sec. 152(c) (4) (C). In view of the foregoing, we are obliged to sustain respondent's determination disallowing the three dependency exemption deductions claimed by petitioner. Earned Income Credit In the case of an eligible individual, section 32(a) allows an earned income credit. As applicable herein, the term "eligible individual" means an individual who has a "qualifying child" for the taxable year. Sec. 32(c) (1) (A) ( ); cf. 32(c) (1) (A) (ii). In turn, and as relevant herein, the term "qualifying child" means a qualifying child of the taxpayer as defined in section 152(c). Sec. 32(c) (3) (A). But, as we have already:discussed, petitioner did not have such a qualifying child in 2009 because of (in the case of Andrale) the provisions of section 152(b) (2) and (in the case of KCC and ARC) the provisions of sectiòn 152(c) (4) (A) ()D. What this means is that petitioner is not entitled, as a matter of law, to an earned income credit for 2009. Accordingly, we are obliged to sustain respondent's determination disallowing the earned income credit claimed by petitioner. // 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 10 Additional Child Tax Credit Section 24 (a) allows a child tax credit, and section 24 (d) specifies the portion thereof that may be refundable, i.e., the so-called additional child tax credit. The child tax credit is allowed with respect to each qualifying child of the taxpayer who has not attained age 17 for which the taxpayer is allowed a deduction under section 151. Sec. 24 (a), (c) (1). Clearly KCC and ARC were under the age of 17 in 2009. However, as previously discussed, neither KCC nor ARC was a qualifying child, as defined in section 152(c), of petitioner. What this means is that petitioner is not entitled, as a matter of law, to a child tax credit (or 4dditional child tax credit) for 2009. Accordingly, we:are obliged to sustain respondent's determination disallowing the additional child tax credit claimed by petitioner. Filing Status We turn now to petitioner's filing status. Head-of-household filing status, as claimed by petitioner on her 2009 return, is jmore advantageous than single filing status, as allowed by respondent, because of a more generous standard deduction, as well as lower tax rates (at least at higher income levels). Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 19 20 21 22 23 24 25 11 Secs. 63(c) (2) (B), 1(b). Section 2(b) (1) defines head of household. To qualify, and as relevant herein, the taxpayer must maintain as her 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. Clearly petitioner maintained a household in 2009 that, for most of the year, was the principal place of abode of Andrale, KCC and ARC. However, as previously discussed, neither Andrale nor KCC nor ARC was a qualifying child of petitioner in 2009, and neither Andrale ·nor KCC nor ARC was the dependent of petitioner withiin the meaning of section 151. What this means is that petitioner is not!entitled, as a matter of law, to claim head-of-household filing status for 2009. Accordingly, we are obliged to sustain respondent's determination disallowing petitioner head-of-household filing status and assigning her instead single filing status for 2009. VIII. Finally, we feel constrained to add a postscript. At trial, petitioner impressed us as a law-abiding, conscientious individual who, over the 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 12 years, has made great sacrifices for her family. We are convinced that petitioner claimed the deductions, credits, and filing status at issue' in this case in good faith after consultation with a professional return preparer. Probably for that reason respondent, rightfully, did not determine any penalty. Unfortunately for petitioner, however, the filing of a joint return by her daughter served .to deprive petitioner of tax benefits to which petitioner might otherwise have been entitled. . Although we can commiserate with petitioner, the law in this case is clear cut and does not permit us to·rule in her favor or reduce the amount of the deficiency determined by respondent, i as much as we might;wish to do so. It may be that after the deficiency is assessed, collection-related remedies will be available to petitioner to aÊeliorate the financial impact on her. IX. In order to give effect to our disposition of the disputed issues, an order directing additional service on Mr. Probasco and decision for respondent will be entered. // Heritage Reporting Corporation (202) 628-4888 X . 13 THIS CONCLUDES THE COURT ' S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 10:31 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // // 1 2 3 4 5 6 7 8 9 10 11 12 1:3 14 I5 16 17 18 19 20 21 22 23 // . . 24 25 // // Heritage Reporting Corporation (202) 628-4888