TAX COURT OPINION

Case: Dahir Aidid
Docket Number: 25470-11S
Judge: Guy
Opinion Type: bench
Filed: 03/18/2013
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 RMM DAHIR AIDID, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 25470-11S. ) ) ) ) OR D E R 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 abovecaptioned case before Special Trial Judge Daniel A. Guy, Jr., at San Diego, California, on March 4, 2013, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Daniel A. Guy, Jr. Special Trial Judge Dated: Washington, D.C. March 18, 2013 SERVEDMar192013 Capital Reporting Company 1 Bench Opinion by Special Trial Judge Daniel A. Guy, Jr. 2 March 7, 2013 3 Dahir Aidid Docket No. 25470-11S 3 4 5 6 7 8 9 10 11 12 13 14 15 16 THE COURT: The Court has decided to render the following as its 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. This proceeding for the redetermination of a deficiency is a small tax case conducted pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the 117 authority granted by section 7459(b) of the Internal 18 19 20 21 22 23 24 25 Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Hereinafter in this bench opinion, section references are to the Internal Revenue Code of 1986, as amended and in effect for 2010, and Rule references are to the Tax Court Rules of Practice and Procedure. Petitioner Dahir Aidid, hereinafter petitioner, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 appeared at trial pro se. Karen E. Walkenhorst appeared on behalf of respondent. The Court'obtained the services of an interpreter to assist petitioner in communicating with the Court and respondent during the trial of this case. The parties filed with the Court a stipulation of facts and a supplemental stipulation of facts, 8 with attached exhibits, which are incorporated herein 9 by this reference. 10 11 12 13 14 15 16 The pertinent facts are as follows. On January 1, 2010, petitioner signed a lease agreement as lessee stating that he would reside in a single family residence with four other individuals during 2010, and pay rent of $1,000 per month. The other persons identified as residents of the home were Khadra Aden, Fadumo Elmi, and two minor children. 17 Consistent with the Court's policy not to use the 18 19 20 21 22 23 24 25 names of minor children, the Court will refer to the children in question as D-1 and D-2. See Rule 27(a) (3). D-1 and D-2 were born in 2003 and 2004, respectively. Ms. Aden is the mother of D-1 and D-2. Ms. Elmi and Ms. Aden are distant relatives of petitioner. During 2010, the lessor of the residence issued monthly receipts to Ms. Elmi for rental 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 payments. Petitioner made relatively modest monthly payments to San Diego Gas and Electric for utility service at the residence during 2010. During 2010, D-1 and D-2 received public assistance in the form of food stamps. There is no evidence in the record as to the total amount of public assistance that D-1 and D-2 received during 2010. The record also includes copies of patient prescription summaries for 2010 for D-1 and D-2, although the summaries do not indicate how the prescriptions were paid for or the identity of the payor. Petitioner filed a Form 1040, U.S. Individual Income Tax Return, for 2010 reporting his filing status as head of household. Petitioner reported adjusted gross income of $22,114, three exemptions (including D-1 and D-2 as dependents), an earned. income credit, and a child tax credit. Petitioner 19 attached to his return a Form 8332, Release/ 20 Revocation of Claim to Exemption for Child by 21 Custodial Parent, signed by Ms. Aden and dated April 22 23 24 25 4, 2011. However, the block on the Form 8332 identifying the taxable year to which the release of the claim to exemption relates is blank. Petitioner identified D-1 and D-2 on his tax return as his 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 nieces. Respondent issued a notice of deficiency to petitioner determining that he is not entitled to: (1) deductions for dependency exemptions for D-1 and D-2; (2) head of household filing status; (3) the earned income credit; and (4) the child tax credit. 7 Petitioner filed a timely petition for redetermina- 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 tion with the Court. At the time the petition was filed, petitioner resided in California. Petitioner contends that D-1 and D-2 were his qualifying children during 20.10 within the meaning of section 152, and, therefore, he is entitled to the dependency exemptions, head of household filing status, the earned income credit, and the child tax credit as reported on his return. We begin our analysis with the fundamental principle of Federal tax litigation that the Commissioner's determinations normally are presumed òorrect. See INDOPCO Inc. v. Commissioner, 503 U.S. 19, 84 (1992); Welch v. Helvering, 290 U.S. 111, 115 (1933). In conjunction with this principle, tax deductions and credits are a matter of legislature grace, and the taxpayer bears the burden of proving that he or she is entitled to any deduction or credit claimed. See Rule 142(a); Deputy v. duPont, 308 U.S. D 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 488, 493 (1940); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Section 151(c) provides that a taxpayer generally is allowed a deduction for the applicable exemption amount for each individual who is a dependent. Section 152(a) defines a "dependent" to include a "qualifying child" or a "qualifying relative." A qualifying child must satisfy the relationship, residency or place of abode, age, and support tests set forth in section 152(c) (1). For purposes of the relationship test, a qualifying child 12 must be the taxpayer's child, brother, sister, step- 13 14 15 16 17 18 19 20 21 22 brother, step-sister, or a descendent of such relatives. Section 152(c) (2). A qualifying relative, however, may be an individual who, for the year in issue, has the same principal place of abode as the taxpayer and is a member of the taxpayer's household, and for whom the taxpayer provides over one half of the support. Sec. 152(d) (1) (C), (2) (H). On the record presented, petitioner failed to show that D-1 and D-2 satisfy the relationship test for a qualifying child under Section 152(c). 23 Specifically, based on petitioner's testimony at 24 trial, we find that D-1 and D-2 were, at best, 25 petitioner's distant cousins. We are not required 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company I I 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 to, nor shall we, rely on his testimony alone to establish his entitlement to the disputed dependency deductions. See, e.g., Shea v. Commissioner, 112 T . C . 183, 188 (1999) . Although petitioner indicated that other individuals could have testified as to his relationship to D-1 and D-2, petitioner did not call any witnesses to testify at trial. . Moreover, petitioner failed to show that D-1 and D-2 satisfy the residency (place of abode) test or the support tests prescribed in section 152(c). We likewise find that petitioner failed to show that D-1 and D-2 are his qualifying relatives within the meaning of section 152(d). The record reflects that D-1 and D-2 received public assistance during 2010 and that receipts for rental payments for the residence were issued to Ms. Elmi. In short, petitioner failed to show that he provided more than one half of D-1 and D-2's support during 2010. The Code provides a relatively favorable tax schedule for a taxpayer who qualifies as a head of household. See sec. 1(b). Section 2(b) provides in relevant part that a taxpayer may file as a head of household if the taxpayer is not married at the end of the year, is not a surviving spouse, and maintains 25 a home as the principal place of abode for a 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 qualifying child (within the meaning of section 152(c)) or any other person who is a dependent of the taxpayer and the taxpayer is entitled to a deduction for the dependent under section 151. Sec. 2 (b) (1) (A) . As previously discussed, petitioner did not have a qualifying child or a qualifying relative during 2010 and he is not entitled to a deduction for a dependent under section 151 for that year. 9 Consequently, Petitioner does not qualify for head of 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 household filing status. In the case of an eligible individual, section 32(a) (1) allows an earned income credit. As relevant here, an "eligible individual" includes an individual who has a qualifying child (within the meaning of: section 152(c)) for the taxable year. Sec. 32 (c) (1) (A) (i), (c) (3) . As previously discussed, petitioner did not have a qualifying child as defined in section 152(c) during 2010, and, therefore, he is not entitled to an earned income credit for that // // /i/ // // // 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 year.1 Section 24 (a) allows taxpayers a credit for each qualifying child. The term "qualifying child" is defined by section 24 (c) (1) to mean a qualifying child as defined by section 152(c) and who has not attained the age of 17. Section 24(d) provides that a portion of the credit may be refundable, which portion is commonly referred to as the additional child tax credit. As previously discussed, petitioner did not have a qualifying child as defined in section 152(c) during 2010, and, therefore, he is not entitled to a child tax credit or additional child tax credit for that year. Consistent with the foregoing, a decision will be entered for respondent. This concludes the Court's oral findings of fact and opinion in this case. . (Whereupon, at 12:46 p.m., the above-entitled 19 matter was concluded.) 20 21 22 23 24 25 1 An eligible individual also includes an individual who does not have a qualifying child. S.ee sec. 32 (c) (1) (A) (ii) . However, an earned income credit is available to such an individual for 2010 only if his or her adjusted gross income is less than $13,460. T.R.B. 617. income exceeded that amount not entitled to an earned income credit for that year. See Rev. Proc. 2009-50, sec. 3.06, 2009-45 Because petitioner's adjusted gross in 2010, petitioner is 866.488.DEPO www.CapitalReportingCompany.com