TAX COURT OPINION

Case: Gary Butler
Docket Number: 27276-12
Judge: Lauber
Opinion Type: bench
Filed: 11/19/2013
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 GARY BUTLER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 27276-12. ) ) ) ) ) , 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 of this case before Judge Lauber at Washington, D.C. on September 26, 2013, containing his oral fmdings of fact and opinion rendered during the trial session. In accordance with the oral findings of fact and opinion, decision will be entered under Rule 155. (Signed) Albert G. Lauber Judge Dated: Washington, D.C. November 19, 2013 SERVtudIOV 202013 Capital Reporting Company 3 1 2 3 4 5. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Bench Opinion by Judge ALBERT G. LAUBER September 26, 2013 GARY BUTLER v. COMMISSIONER Docket No. 27276-12 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 by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. All section references are to the Internal Revenue Code as in effect for 2011, and all Rule references are to the Tax Court Rules of Practice and Procedure. Some of the facts have been stipulated and are so found. The stipulation of facts and attached exhibits are incorporated herein by this reference. Gary Butler appeared on his own behalf and 21 Christopher Moran appeared on behalf of respondent. 22 Petitioner resided in Washington, D.C., when he filed 23 24 his petition. Respondent determined a deficiency in 25 petitioner's 2011 Federal income tax of $6,755. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 After concessions by respondent, the sole issues 2 3 4 5 6 7 8 9 remaining for decision are whether petitioner is entitled to claim a dependency exemption, a child tax credit, and an earned income credit with respect to one of his two minor children. Under Rule 27(a) (3), we refer to minor children by their initials. Here, the minor child whose status is in dispute is "T.J." FINDINGS OF FACT T.J. is petitioner's biological daughter. 10 Petitioner and Tamika Johnson, T.J.'s mother, were 11 never married and did not live together during 2011. 12 Petitioner and Ms. Johnson had an oral shared custody 13 14 15 16 17 18 19 20 21 22 23 24 25 arrangement whereby T.J. would spend the weekends and portions of holidays with her father. During 2011, petitioner generally would pick up T.J. after school on Friday afternoons and return T.J. to her mother on Sunday evening. (Sometimes, petitioner might return T.J. to school on Monday morning.) At T.J.'s request, T.J. split her time during holidays between her parents' homes. The total time T.J. resided with petitioner during 2011 was less than half the year. Petitioner provided financial support to T.J. in 2011. He paid for her cellular phone and for the expenses incurred while she lived with him. However, these amounts constituted less than half of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 T.J.'s overall support for the year. 2 3 4 5 6 Petitioner timely filed an amended 2011 tax return, on which he claimed a dependency exemption for T.J., and he included T.J. as a qualifying child for purposes of calculating his eligibility for the Earned Income Tax Credit and the Additional Child Tax 7 Credit. Petitioner did not attach to his 2011 return 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IRS Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, nor did he attach any similar documentation memorializing an agreement between petitioner and Ms. Johnson regarding who would claim T.J. as a dependent. OPINION The Commissioner's determination of a deficiency is generally presumed correct, though this presumption can be rebutted by the taxpayer. See Section 7491(a); Rule 142(a);·Welch v. Helvering, 290 U.S. 111, 115(1933). Petitioner does not contend that the burden of proof should shift to respondent under section 7491(a) and, if he had advanced this contention, it would lack merit. Petitioner has provided no credible evidence that would cause the burden to shift to respondent. Section 151 provides a taxpayer an exemption from his or her taxable income for each 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 dependent, as defined in section 152. Section 152(a) defines a dependent as either a "qualifying child" or a "qualifying relative" of the taxpayer. To be considered a "qualifying child" of the taxpayer, the child must (among other things) have the same principal place of abode as the taxpayer for more than one-half of the taxable year. Section 152(c) (1) (B). In this case, petitioner stipulated to the facts that "T.J. resided primarily 10 with her mother, Tamika Johnson, in 2011"; that "T.J. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 sporadically lived with petitioner during 2011"; and that the total time T.J. lived with petitioner "was less than one half of the year." Because T.J. lived with her mother for more than half the year, T.J. cannot be petitioner's qualifying child for purposes of the Code. Though petitioner stipulated to the contrary, he attempted to argue at trial that T.J. did in fact reside with him for more than half the year. While we can set aside a pre-trial stipulation of facts in limited circumstances, see Lovenguth v. Commissioner, T.C. Memo 2007-70, we are not inclined to do so in this case. In trying to establish that T.J. resided 25 with him for more than half the year, petitioner 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 testified that T.J. stayed with him from Friday night to Sunday night every week, and that she spent about half of holiday and vacation periods with him. Even under the most generous mathematical approach, we do not see how two nights a week and half of holiday periods can add up to the requisite 183-night threshold for us to find that T.J. resided with petitioner more than half the year. In addition, petitioner offered no records or other testimony to corroborate this assertion. For a family member to be a "qualifying relative," amongst other requirements, a taxpayer 13 must provide the relative with over half of the 14 15 16 17 18 19 20 relative's support for the year and the relative cannot be a qualifying child of the taxpayer or anyone else. Section 152(d) (1) (C) and (D). Because petitioner passes neither test, T.J. is not petitioner's "qualifying relative." First, petitioner did not establish that he provided more than half of T.J.'s support in 2011. 21 While he did pay for her expenses when she was with 22 23 him, it was established that she was with him less than half the year. Petitioner also paid for 24 T.J.'s cell phone, but he offered no evidence at 25 trial to disturb the facts to which he stipulated -- 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 namely, that T.J.'s cell phone expenses, when added to the expenses petitioner incurred for T.J. when she was with him, amounted to less than half of T.J.'s total support. Second, T.J. was the qualifying child of Ms. Johnson. Ms. Johnson is T.J.'s mother; T.J. lived with her more than half of the year; and T.J. 8 meets the age and other requirements of section 9 152(c) (1). Because T.J. is Ms. Johnson's qualifying 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 child, T.J. cannot be petitioner's qualifying relative under the statutory framework of section 152. Though T.J. is neither petitioner's qualifying child nor his qualifying relative for 2011, the Code does provide a mechanism for a custodial parent to release a claim to a dependency exemption for a tax year. The custodial parent -- here, Ms. Johnson -- must sign a written declaration that she will not claim the child, T.J., as a dependent for 2011. The noncustodial parent -- here, petitioner -- must attach this release, on IRS Form 8332 or its equivalent, to his Federal tax return for that tax year. See Section 152(e) (2); Armstrong v. Commissioner, 139 T.C. 468 (2012). In this case, petitioner did not provide a signed declaration or 866.488.DEPO www.CapitalReportingCompany.com Capital Reportiiig Company 9 1 2 3 4 5 6 7 8 9 10 11 release from Ms. Johnson with his return, and he has not produced any written agreement to date. Rather, petitioner argues that he and Ms. Johnson had an oral agreement that he would claim T.J. as a dependent for tax purposes. Petitioner's assertion that he and Ms. Johnson had an oral agreement, even if true, falls short of meeting the statutory requirement for claiming T.J. as a dependent under the facts of this case. This Court has held previously that an oral agreement is not sufficient; rather, the statute 12 explicitly requires a written agreement to transfer 13 14 15 dependency exemption claims from one parent to another. McGuire v. Commissioner, 77 T.C. 765(1981). Even if an oral agreement were enough, petitioner 16 still would not have established this premise. He 17 18 19 20 21 22 23 24 25 did not produce Ms. Johnson as a witness, and the only evidence we have to consider is petitioner's testimony. Unfortunately, his testimony alone is not enough to establish that he had the absolute right to claim T.J. as a dependent. While we genuinely applaud petitioner's determination to care for his minor children and to be involved in their lives, we find that he has not established that T.J. was his qualifying child or 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 6 7 8 9 qualifying relative during 2011, or that he received a written waiver from Ms. Johnson that would enable him, as the noncustodial parent, to claim T . J. as his dependent. Respondent's determinations in this regard are sustained. To reflect the foregoing, a decision will be entered under Rule 155. This concludes the Court's oral findings of fact and opinion in this case. And there will be -- a copy of this opinion 10 will be furnished to the parties in several weeks' 11 time. And I believe the.Court will now be adjourned 12 until 2:00 tomorrow. Correct? 13 14 15 16 17 18 19 20 21 22 23 24 25 THE CLERK: All rise. (Whereupon, at 3:28 p.m., the above- entitled matter was concluded.) 866.488.DEPO www.CapitalReportingCompany.com