TAX COURT OPINION

Case: James Shannon Sawyer
Docket Number: 958-11
Judge: Kroupa
Opinion Type: bench
Filed: 02/22/2012
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 JAMES SHANNON SAWYER, ) Petitioner, v. ) ) ) Docket No. 958-11 COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ORDE R Pursuant to Rule 152 (b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of tlÀe Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of proceedings of the above case before Judge Diane L. Kroupa at Winston-Salem, North Carolina on February 1, 2012, containing her oral findings of fact and opinion rendèred at the conclusion of trial. . In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Diane L. Kroupa Judge Dated: Washington, D.C. February 22, 2012 RVE0 FEB 2 4 2012 3 r Bench Opinion by Judge Diane L. Kroupa Sawyer v. Commissioner Docket No. 958-11 February 1, 2012 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. THESE ORAL FINDINGS OF FACT AND OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY OTHER CASE. This bench opinion is made pursuant to the authority granted in section 7459(b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for 2009, and all Rulel references are to the Tax Court Rules of Practice and Procedure. Petitioner appeared pro se, and Elizabeth Bux appeared on behalf of Respondent. FINDINGS OF FACT AND OPINION Certain facts have been stipulated. The stipulation of facts filed by the parties, with accompanying exhibits, is incorporated by this reference. Petitioner resided in North Carolina at the time he filed the petition in this case. Respondent determined a $5,974 deficiency in Petitioner's Federal income tax for 2009 in a 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 Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 deficiency notice. Respondent made the following adjustments in the deficiency notice. First, Respondent denied Petitioner' s claimed dependency exemptions for two daughters of his fiancee, all of whom lived with Petitioner during 2009 and all of whom Petitioner provided all their support (the girls shall be referred to as tl e children for privacy purposes) . Second, Respondent changed Petitioner's filing status from head of househcld to single. Third, Respondent denied Petitioner' s claimed child tax credit and denied Petitioner' s claimed earned income credit . Respondent also det rmined that Petitioner was not entitled to the American Opportunity Credit . Petitioner contests all adjustments Respondent determined in the d ficiency notice. 16 . Respondent now concedes that the two 17 18 19 20 21 22 23 24 25 children qualify as a "qualifying relative" of Petitioner's for de endency purposes because the children had the sarne principal place of abode as t Petitioner and he. p ovided for their support. Respondent also conc edes that Petitioner is entitled to claim head of ho sehold filing status instead of single status . Petitioner concedes that he is not entitled to the Ame ican Opportunity Credit as he did not attend any schocl or college in 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 5 Petitioner was employed during 2009 and earned approximately $32,000 in wages. OPINION We are asked to decide whether Petitioner is entitled to the earned income. credit and the child tax credit if the children lived with him during the year and he provided their support. The issue revolves around the definition of "qualifying relative" for dependency purposes that is different from the definition of "qualifying child" for earned income credit and child tax credit purposes. We first address the earned income credit Petitioner claimed on his return for 2009. Eligible individuals may claim an earned income credit on their Federal tax return. Sec. 32(a). An individual is eligible if they have a qualifying child for the taxable year. Sec. 32(c) (1) (A) ( d. A qualifying child is one who satisfies three requirements set forth in section 32(c) (3) relating to the age, principal place of abode, and relationship to the taxpayer claiming the credit. Here, Petitioner has substantiated that he maintained as his home a household that constituted the principal place of abode for the children during 2009. Petitioner fails to satisfy, however, 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 relationship test. A qualifying child for this purpose is a child of the taxpayer or a descendant of such a child, or a brother, sister, stepbrother, or stepsister of the täxpayer or a descendant of any such relative. Sec. 152(c). As stated previously, the children are daughters of Petitioner's fiancee. As such, neither child meets the requirements to be a "qualifying child" for earned income credit purposes. Accordingly, Petitidner has no qualifying children for 2009. Even though we find Petitioner did not have any qualifying children, Petitioner could also be an eligible individual. See Sec. 32(c) (1) (A) (ii). In this case, however, Petitioner is still not entitled to the earned income credit for 2009 because his total income exceeded the completed phase out amount for 2009. See Rev. Proc. 2006-53, 2006-2 C.B. 996, Sec. .07. Therefore, we (sustain Respondent's determination that Petitioner is not entitled to an earned income credit. We next address the child tax credit. A child tax credit is authorized with respect to each "qualifying child" of the taxpayer. Sec. 24 (c) (1). ! The term "qualifying child" for this purpose means a qualifying child of the taxpayer who has not attained 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 age 17 as defined in section 152(c). As relevant here, the children do not qualify under section 152(c) because they are daughters of Petitioner's fiancee. Accordingly, neither of the children is a "qualifying child" within the meaning of section 24 (c) . It follows, therefore,.that Petitioner is not entitled to a child tax credit under section 24 (a) regarding the children. The Court, therefore, sustains Respondent's adjustments in the deficiency notice except regardinkj Petitioner's filing status and dependency exemptions¡. To reflect the foregoing and the concessions of the parties, a decision will be entered under Rule 155. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 10:23 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // Heritage Reporting Corporation (202) 628-4888