TAX COURT OPINION

Case: Daniel Rodriguez
Docket Number: 5171-18S
Judge: Morrison
Opinion Type: bench
Filed: 01/13/2020
Pages: 15

BD UNITED STATES TAX COURT WASHINGTON, DC 20217 DANIEL RODRIGUEZ, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 5171-18S. ORDER OF SERVICE OF TRANSCRIPT 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 respondent a copy of the pages of the revised transcript in the above case before Judge Richard T. Morrison, at Philadelphia, Pennsylvania, on November 20, 2019, containing his oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent on the deficiency and for petitioner on the penalty. (Signed) Richard T. Morrison Judge Dated: Washington, D.C. January 13, 2020 SERVED Jan 14 2020 Revised 12/19/19 IN THE UNITED STATES TAX COURT BD In the Matter of: DANIEL RODRIGUEZ, Petitioner, ) ) ) ) Docket No. 5171-18S ) ) v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) Pages: 1 through 13 Place: Philadelphia, Pennsylvania Date: November 20, 2019 IN THE UNITED STATES TAX COURT In the Matter of: DANIEL RODRIGUEZ, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Docket No. 5171-18S ) ) ) ) ) ) ) ) U.S. Custom House 200 Chestnut Street Room 300, 3rd Floor Philadelphia, Pennsylvania 19106 November 20, 2019 The above-entitled matter came on for bench opinion pursuant to notice at 9:09 a.m. BEFORE: HONORABLE RICHARD T. MORRISON Judge APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 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 P R O C E E D I N G S 2 (9:09 a.m.) THE CLERK: Docket number 5171-18S, Daniel Rodriguez. (Whereupon, a bench opinion was rendered.) 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 Judge Richard T. Morrison 3 November 20, 2019 Daniel Rodriguez v. Commissioner Docket No. 5171-18S 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 facts and opinion. The oral findings of fact and opinion shall not be relied on as precedent in any other case. 1 2 3 4 5 6 7 8 9 10 This proceeding was heard as a Small Tax Case 11 pursuant to the provisions of section 7463 of the Internal 12 Revenue Code of 1986, as amended, and Rules 170 through 13 14 174 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the 15 authority granted by section 7459(b) of the Internal 16 Revenue Code of 1986 as amended, and Rule 152 of the Tax 17 Court Rules of Practice and Procedure. 18 19 20 21 22 Unless otherwise indicated, all section numbers refer to the Internal Revenue Code of 1986, as amended and in effect for the tax year 2016. All Rule numbers refer to the Tax Court Rules of Practice and Procedure. This is a deficiency case involving petitioner 23 Daniel Rodriguez's 2016 tax year. The Commissioner 24 determined a deficiency of $6,187 and an accuracy-related 25 Penalty of $27.40. The Commissioner has conceded the accuracy-related penalty. I hold that there is a 4 deficiency of $6,187 and no penalty. Findings of Fact In 2003 petitioner met Angela Baez-Torres. At the time petitioner lived by himself. Baez-Torres was living with her mother and her two girls on Huntington Street in Philadelphia. The girls' biological father was no longer involved in the lives of Baez-Torres and her daughters. 1 2 3 4 5 6 7 8 9 10 In 2004 or 2005, petitioner moved in with Baez- 11 Torres and her two girls at the Huntington Street 12 13 residence. I discuss the significance of this move later. In 2007 or 2008, petitioner, Baez-Torres, and 14 the two girls moved into a residence on Lawrence Street in 15 Philadelphia. 16 17 18 19 For tax year 2016, petitioner filed a federal income tax return. He claimed a filing status as "head of household". He claimed dependency-exemption deductions for Baez-Torres and each of the two girls. He claimed the 20 additional child tax credit in the amount of $1,000. This 21 amount corresponded to one of the girls being a qualifying 22 child of his for this purpose. It is unclear why he 23 24 claimed one but not both girls as a qualifying child. He claimed the earned-income credit in the amount of $5,187. 25 This amount was calculated under the assumption that both girls were his qualifying children for this purpose. 5 The Commissioner issued to petitioner a notice of deficiency dated December 11, 2017. Petitioner received the notice of deficiency. The notice of deficiency allowed the three dependency-exemption deductions for Baez-Torres and the two girls on the grounds that all three were qualifying relatives of petitioner within the meaning of section 152(d). The notice of deficiency allowed petitioner's filing status to be "head of household", the filing status he had reported. The notice of deficiency determined that 1 2 3 4 5 6 7 8 9 10 11 12 13 14 petitioner had no qualifying children within the meaning 15 of section 32(c)(3)(A), and therefore it allowed an 16 earned-income credit of only s123 rather than the $5,187 17 18 claimed on the return. The notice of deficiency determined that 19 petitioner had no qualifying children for the purpose of 20 section 24(c)(1), and therefore it disallowed any 21 additional child tax credit. 22 On March 8, 2018, petitioner filed his Tax Court 23 Petition. When he filed the petition, he was a resident 24 of Pennsylvania. 25 In 2018, petitioner, Baez-Torres, and the two girls moved to a new residence on K Street in 6 Philadelphia. Discussion The only way for the two girls to be qualifying children of petitioner under section 32(c)(3)(A) -- that is, for the purpose of the earned-income credit -- is if they were petitioner's stepchildren. This is because section 32(c)(3)(A) defines a qualifying child as a qualifying child as defined in section 152(c), as determined without regard to section 152(c)(1)(D) and section 152(e). Section 152(c)(1) imposes five requirements for an individual to be a qualifying child of 1 2 3 4 5 6 7 8 9 10 11 12 13 the taxpayer (or four requirements when the one-half- 14 15 support requirement of section 152(c)(1)(D) is removed from the definition pursuant to section 32(c)(3) (A)). The 16 first requirement (found in section 152(c)(1)(A)) is that 17 18 19 the individual must bear the relationship to the taxpayer described in section 152(c)(2) (A) or (B). Section 152(c)(2) (A) refers to a child of the taxpayer as a 20 qualifying relationship, and section 152(f)(1)(A)(I) 21 defines such a child to include a stepchild of the 22 taxpayer. 23 Similarly the only way for the girls to be the 24 qualifying children of petitioner under section 25 24(c)(1) -- that is, for the purpose of the additional c.nners child tax credit -- is if they were petitioner's stepchildren. This is because section 24(c)(1) also defines a qualifying child by reference to the definition 7 of a qualifying child in section 152(c). For the girls to be the stepchildren of petitioner, petitioner and Baez-Torres must have been 1 2 3 4 5 6 7 married. See Von Tersch v. Commissioner, 47 T.C. 415, 8 9 10 11 12 421-422 (1967). Petitioner argues that he and Baez-Torres had entered into a common-law marriage. In determining the existence of a marriage for the purposes of section 152(c), we apply the law of the state in which the couple resided. See, e.g., Sharp v. 13 Commissioner, T.C. Memo. 2017-208, at *11-*15; see also 14 Von Tersch v. Commissioner, 47 T.C. at 421-422. Here, 15 that state is Pennsylvania. 16 Common-law marriage was abolished in 17 Pennsylvania on January 1, 2005. Act of Nov. 23, 2004, 18 No. 2004-144, sec. 1, 2004 Pa. Laws 954. However, 19 Pennsylvania does acknowledge common-law marriages entered 20 into before January 1, 2005, as valid. 23 Pa. Cons. Stat. 21 22 23 24 sec. 1103. Before common-law marriage was abolished, the courts of Pennsylvania made the following statements about the conditions for establishing a common-law marrlage: "Marriage in Pennsylvania is a civil contract by 25 which a man and a woman take each other for husband and 1 wife. There are two kinds of marriage: (1) ceremonial; 8 2 3 4 5 6 7 8 9 and (2) common law." Staudenmayer v. Staudenmayer, 714 A.2d 1016, 1019 (Pa. 1998) (citations omitted). And: "A common law marriage does not come into existence unless the parties uttered the verba in praesenti, the exchange of words in the present tense for the purpose of establishing the relationship of husband and wife." Id. at 1021. Similarly: "[A] common law marriage is a 10 marriage by the express agreement of the parties without 11 ceremony, and almost invariably without a witness, by 12 words -- not in futuro or in postea -- but in praesenti, 13 uttered with a view and for the purpose of establishing 14 the relationship of husband and wife." In re Estate of 15 Manfredi, 159 A.2d 697, 700 (Pa. 1960). 16 17 18 19 And: "The burden rests with the party claiming a common law marriage to produce clear and convincing evidence of the exchange of words in the present tense spoken with the purpose of establishing the relationship 20 of husband and wife, in other words, the marriage 21 22 23 24 contract." Staudenmayer, 714 A.2d at 1021. Clear and convincing evidence is "evidence that is so clear, direct, weighty, and convincing as to enable the [finder of fact) to come to a clear conviction, 25 without hesitancy, of the truth of the precise facts of the issue." 9 Rohm & Haas Co. v. Cont'l Cas. Co., 781 A.2d 1172, 1179 (Pa. 2001) (quoting Lessner v. Rubinson, 592 A.2d 678, 681 (Pa. 1991)). Compared to other standards of proof, clear-and-convincing is between beyond-a- reasonable-doubt and preponderance-of-evidence. Commonwealth v. Maldonado, 838 A.2d 710, 715 (Pa. 2003). Asked to address whether he and Baez-Torres exchanged words with the purpose of establishing the relationship of husband and wife, petitioner stated he and 1 2 3 4 5 6 7 8 9 10 Baez-Torres had a discussion in which he agreed to take 11 care of Baez-Torres's children. He characterized this 12 discussion as "thinking" about getting married. As the 13 Commissioner points out such a conversation does not refer 14 to marriage in the present tense, but in the future tense. 15 Furthermore even if this conversation qualified as the 16 exchange of words required for common-law marriage under 17 Pennsylvania law, petitioner did not remember when the 18 conversation took place. Therefore, it could have taken 19 place after December 31, 2004, and thus after common-law 20 marriage had been abolished. 21 Baez-Torres testified that she and petitioner 22 held themselves out as married when petitioner moved into 23 her mother's house. However, the record is unclear as to 24 whether this move occurred in 2004 or 2005. Because this 25 move could have occurred in 2005, this testimony does not (s7334002250!aperationseescribersnet!www.esaibersaet 10 show that a common-law marriage occurred before January 1, 2005. Baez-Torres testified that on her birthday in December 2005, petitioner gave her a ring that she described as an "engagement ring". The ring itself was a gold band with diamonds. Despite describing the ring as an engagement ring, she stated that after receiving this ring she considered herself married to petitioner. However, she testified that petitioner's gift of the ring 1 2 3 4 5 6 7 8 9 10 did not prompt her or petitioner to make any statement 11 12 13 14 concerning marriage. Thus, the giving of the ring was not accompanied by any statement that would establish a common-law marriage. Furthermore, even if the ring itself could be considered a statement for the purpose of 15 establishing a marriage, the gift took place in December 16 2005, which was after the abolition of common-law 17 marrlage. 18 19 20 21 Petitioner introduced paperwork that petitioner and Baez-Torres had given to third parties (for example, to hospitals and schools) that referred to petitioner as the stepfather of the two girls. However, this paperwork 22 was from the year 2017. Baez-Torres testified that she 23 had named petitioner on similar paperwork as the 24 stepfather of her daughters as early as when he moved into 25 her mother's house. However, it is unclear whether the move took place in 2004 or 2005. Thus, this testimony 11 does not establish a common-law marriage. Petitioner's argument at trial was that he had a common-law marriage with Baez-Torres because for many years he had agreed to act as the girls' stepfather and had actually acted as the girls' stepfather. This argument implicitly equates an agreement to act as a stepfather (and actually acting as a stepfather) as a contract to form a marriage. Even if this theory is correct as a matter of law, it does not establish a common-law marriage before January 1, 2005. Although the evidence strongly indicates that by the time of trial, 1 2 3 4 5 6 7 8 9 10 11 12 13 petitioner had agreed to act as the girls' stepfather and 14 that he had been acting as the girls' stepfather for many 15 years (specifically, there was testimony that he had 16 agreed at some point to act as the girls' stepfather, that 17 he had supported the girls financially, and that he was 18 often referred to by Baez-Torres and by the girls as the 19 girls' stepfather), the evidence is not clear and 20 21 22 23 24 convincing that petitioner agreed to act as stepfather, and actually acted as a stepfather, before January 1, 2005. More generally, my conclusion is that the evidence is not clear and convincing that petitioner and 25 Baez-Torres established a common-law marriage before 12 January 1, 2005. Petitioner does not argue, nor does the evidence show, that the two had been ceremonially married by the end of 2016. Therefore, I conclude that they were not married by the end of the tax year in question, 2016. A decision will be entered for respondent on the deficiency and for petitioner on the penalty. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 9:21 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 CERTIFICATE OF TRANSCRIBER AND PROOFREADER 13 CASE NAME: Daniel Rodriguez v. Commissioner DOCKET NO.: 5171-18S We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 13 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Adrian 1 2 3 4 5 6 7 8 Morris on November 20, 2019 before the United States Tax 9 Court at its session in Philadelphia, PA, in accordance 10 with the applicable provisions of the current verbatim 11 12 reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten 13 transcript against the verbal recording. 14 18 19 20 21 22 23 24 25 Amy Parnell, CDLT-179 Transcriber Traci Fine, CDLT-169 Proofreader 12/6/19 Date 12/8/19 Date