TAX COURT OPINION

Case: Jeannetta Johnson-Smith
Docket Number: 4519-09
Judge: Colvin
Opinion Type: bench
Filed: 02/24/2010
Pages: 10

UNITED STATES TAX COUR T WASHINGTON, DC 20217 . JEANNETTA JOHNSON-SMITH, Petitioner v . ), Docket No . 4519-09 . (. ) COMMISSIONER OF INTERNAL REVENUE, Respondent O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s 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 above case before Judge Joseph Robert Goeke at Atlanta, Georgia, on February 2, 2010, containing his oral findings of fact and opinion rendered, at the conclusion of the trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent as to the deficiency and for petitioner as to the addition to tax . (Signed) Joseph Robert Goeke Judge Dated : Washington, D .C . February 24, 2010 SERVED MAR _ 22010 3 1 Bench Opinion by Judge Joseph Robert Goeke 2 Jeanetta Johnson-Smit h 3 Docket No . 4519-09 February 2, 2010 4 The Court has decided to render ora l 5 findings of fact and opinion in this case, and th e 6 following represents the Court's oral findings of fact 7 and opinion . The oral findings of fact and opinion 8 shall not be relied upon as precedent in any other 9 case . 10 This case involves Respondent's deficienc y 11 determination in income tax for 2004 and 2005, and 12 additions to tax under Code Section 666~~ for each ( Q 13 year . References to the Code herein are to th e 14 Internal Revenue Code in effect for the years at 15 issue . 16 This case was tried under the regula r 17 procedures of this Court , and pursuant to Tax Court 18 Rule of Practice and Procedure 142(a )( 1), the burden 19 of proof is on the Petitioner . Under Code Sectio n 20 7491, the burden of proof might shift to Respondent if 21 Petitioner had introduced credible evidence to support 22 her position at trial and during the administrativ e 23 process . Petitioner has failed to introduc e 24 sufficient evidence to support her position , and the 25 burden of proof rests upon her . Heritage Reporting Corporation (202) 628-4888 I 4 1 Petitioner filed a timely petition, and her 2 residence when the petition was filed was in Georgia . 3 The issues before the Court include two claime d 4 dependents . The claiming of these dependents and the 5 allowance of the dependents also affects Petitioner's 6 filing status, because if the dependents ar e 7 disallowed, she .will not . be able to file as head-of- 8 household and will be relegated to filing as a single 9 person . 10 An additional issue involves a small amount 11 of omitted interest income which Petitioner conceded 12 at trial . The final issue involves additions to tax 13 under Section 6662 for the accuracy-related penalty 14 for both years . 15 Petitioner filed federal income tax returns 16 for 2004 and 2005, claiming head-of-household filing 17 status . The dependents claimed for 2004 were fo r 18 Petitioner's brother, Martin Johnson, and Mr . Bruce 19 Corcoran, who became her spouse in years after those 20 in dispute . In 2005, Petitioner again claimed her 21 brother as a dependent, but did not claim Mr . 22 Corcoran . 23 In 2004, Mr . Corcoran had income and filed a 24 timely federal income tax return showing filing status 25 of single person . At trial Petitioner claimed tha t Heritage Reporting Corporation (202) 628-4888 1 Mr . Corcoran was her common-law husband in 2004, but . 2 she provided no testimony to support this other than 3 her claim that he lived with her throughout the year . 4 She'also provided no documentation to support the fact 5 that she was married with Mr . Corcoran, and her claim 6 that she was married is inconsistent with the fac t 7 that neither her nor Mr . Corcoran filed joint returns . Petitioner's brother, Martin Johnson, di d 9 not live with her in 2004 and 2005 . Petitione r 10 alleges that Mr . Corcoran did live-with her in 2004, 11 but he did not testify at trial, and Petitioner' s 12 testimony regarding Mr . Corcoran's residence in 2004 13 is not verified by any other documentation in th e 14 record . 15 During both 2004 and 2005, Mr . Johnson . 16 suffered from schizophrenia and received benefits from 17 the Social Security Administration and the State o f 18 Texas . Generally in this case, the record i s 19 inadequate relative to . Petitioner's claims to hav e 20 provided over one-half of the support for the claimed 21 dependents, because Petitioner provided almost n o 22 documentation to support her claims. 23 Petitioner did testify at length as to her 24 estimates of the amounts Mr . Johnson received, both 25 from her and from the government agencies in 2004 an d Heritage Reporting Corporation (202) 628-4888 6 1 2005 . She did not testify in any detail regarding 2 support she alleged to provide to Mr . Corcoran . 3 any event, for reasons we will explain herei n 4 Petitioner is not entitled to the claimed dependency 5 exemption for Mr . Corcoran in 2004 . 6 The . legal analysis in this case is clearly 7 controlled by the Code and the Treasury regulations . 8 We will first address Petitioner's claim for th e 9 dependency exemption for Mr . Corcoran in 2004 . If, as 10 Petitioner alleges, Mr . Corcoran was her spouse i n 11 2004, she would not be entitled to the claime d 12 personal exemption, because under Code Section 151(d), 13 to claim as a dependent a spouse under th e 14 circumstances of her return, Mr . Corcoran would not 15 have had - could not have had any gross income in 16 2004 . 17 The parties have stipulated that he, in 18 fact, did have gross income in 2004, and Petitioner 19 testified that he received a military pension in 2004 . 20 So this would exclude-the possibility that he could be 21 a dependent as her spouse . If, in fact, he was no t 22 her spouse, in order to be a dependent in 2004, Mr . 23 Corcoran would have to qualify under Code Section 24 152(a)(9) . 25 Section 152(a) defines dependents to include Heritage Reporting Corporatio n (202) 628-4888 7 1 listed individuals who receive over half of thei r 2 support from the person claiming them as a dependen t 3 during the taxable year . Subsection ( a)(9) of . Section 4 152 provides that "an individual , other than a n 5 individual who at any time during the taxable year was 6 the spouse determined without regard to Section 770 3 7 of the taxpayer , who for the taxable year of th e 8 taxpayer has as his principal place of abode the home 9 of the taxpayer and is a member of the taxpayer' s 10 household . " 11 Therefore , in order for the Petitioner to 12 claim Mr . Corcoran as a dependent in the year 2004, 13 she must establish that he had his principal place of 14 abode in her household and that she provided over half 15 of his support . The record fails to establish either 16 of these circumstances , although Petitioner di d 17, testify that Mr . Corcoran resided with her . . 18 Even if we were to accept this testimony, 19 Petitioner has failed , even .based upon her own 20 testimony, to establish she provided over half of Mr . 21 Corcoran's support . Therefore, we are left with no 22 alternative but to disallow Mr . Corcoran as a 23 dependency exemption of the Petitioner . 24 We now turn to Petitioner's brother, Mr . 25 Johnson . The Code regarding dependency exemptions an d Heritage Reporting Corporation (202) 628-4888 8 1 specifically Section 152 was changed between the years 2 2004 and 2005 . This change does not affect th e 3 . outcome, as the analysis for each year is the same . 4 For 2004, Code Section 152(a)(3) provide s 5 that a dependent includes a brother who receives ove r 6 half of their support from the taxpayer during th e 7 taxable year . For 2005 , this analysis is based upon 8 similar provisions in Code Section 152(0 ) . In both 9 years, Petitioner must establish that she provided 10 over half the support for Mr . Johnson . 11 Because we find Petitioner's support of her 12 brother to be admirable and because we generally find 13 her testimony to be credible, the Court has analyzed 14 her testimony in an attempt to establish whether she 15 provided over half the support for Mr .. Johnson in 2004 16 and 2005 . The Court does this despite the fact that 17 she has provided no documentation to substantiate her 18 assertions . 19 Based upon Petitioner's testimony, w e 20 estimate that Mr . Johnson had the following expenses 21 in 2004 and 2005 : rent, $5,000 ; cigarettes, $1,500 ; 22 utilities, $2,000 ; food and personal items, $5,000 23 These amounts total $13,500 . Petitioner also 24 testified as to her estimates of the amounts Mr . 25 Johnson received in each year from the Social Security Heritage Reporting Corporatio n (202) 628-4888 9 1 Administration and the State of Texas . 2 She estimated . Mr . Johnson received $500 per 3 month from Social Security, and her testimony , 4 together with one piece of documentation she provided, 5 indicates that Mr . Johnson would have received $13 0 6 per month from the State of Texas . These amounts 7 total $7,560 . Under the Treasury regulations i n effect for 2004 and 2005, specifically Treasur y 9 Regulation Section 1 .152-1(a)(2)(ii), in computing the 10 total amount of support for a person claimed as a 11 dependent, amounts received from Social Security and 12 state welfare must be included . 13 Therefore, in order for Petitioner t o 14 provide over half of the support for Mr . Johnson in 15 2004 and 2005, his total amount of support would have 16 had to exceed $15,000 given the amounts he received 17 from the Social Security Administration and the State 18 of Texas, based-upon Petitioner's own estimates . 19 Given . the fact that even liberally construin g 20 Petitioner's testimony, the total support is far less 21 than $15,000, we are left with no alternative but to 22 deny the dependency exemptions Petitioner claimed for 23 Mr . Johnson in both 2004 and 2005 . 24 Since Petitioner is not entitled to th e 25 claimed dependency exemptions, she is not entitled to Heritage Reporting Corporatio n (202) 628-4888 1 0 1 head-of-household status in either year . 2 The final issue . for decision is whether the 3 Petitioner should be liable for the addition to tax as 4 asserted by Respondent under-Code Section 6662(a) . 5 The amount asserted by, Respondent is $528 .40 for 200 4 and $412 for 2005 . ddition to tam of 20 percent €e erpa ento t o 1~'Cjul' 41C~n as QQQ ba I ~r ]_ ~r s' }}.to a1 ss es yt }8 ad- ~'k a Yf itiyl1n tc 'tax . 7 8 9 10 i l l 12 However, Code Section.6664(iT) provides 13 specifically that no penalty shall-be imposed with 14 respect to any portion of an underpayment unde r 15 Section 6662) if it is shown that reasonable cause fo r 16 such underpayment exists and that the taxpayer acted 17 in good faith . Applying those principles to the 18 present case,. we find that Petitioner did act in good 19 faith and that she had reasonable cause for he r 20 failure to properly report the amount of tax in 2004 21 and 2005 . 22 Petitioner believed that she was entitled to 23 the dependency exemptions, because . she believed she 24 provided over half . the support for the individuals in 25 question . The fact that she failed to document thos e Heritage Reporting Corporation (202) 628-4888 (cid:127) 1 1 1 amounts does not change our conclusion that sh e 2 credibly believed she was entitled to the dependency 3 exemptions . Therefore, we find for the Petitione r 4 regarding the additions to tax . 5 As a result, a decision will be entered for 6 Respondent regarding the deficiency determinations and 7 for Petitioner regarding the addition to tax . 8 This concludes the Court's oral findings of 9 fact and opinion in this case . . 10 (Whereupon, at 11 :30 a .m ., the bench opinio n 11 was concluded .) 1 2 13 14 15 16 / / 17 18 19 20 // . 21 / ./ 2 2 23 24 // 25 Heritage Reporting Corporation .(202) 628-4888