Court Opinion

ID: 4605335
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:36:07.796978+00
Date Added: 2024-06-11T07:53:10.489326
License: Public Domain

GREGORY MCBRIDE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent McBride v. Comm'rDocket No. 11394-13 United States Tax Court2015 Tax Ct. Memo LEXIS 25; January 8, 2015, FiledDecision text below is the first available text from the court; it has not been editorially reviewed by LexisNexis. Publisher's editorial review, including Headnotes, Case Summary, Shepard's analysis or any amendments will be added in accordance with LexisNexis editorial guidelines.2015 Tax Ct. Memo LEXIS 25">*25 Docket No. 11394-13. Filed January 8, 2015.Gregory McBride, pro se.Janet F. Appel and Sheida Lahabi, for respondent.MEMORANDUM FINDINGS OF FACT AND OPINIONCOHEN, Judge: Respondent determined a $3,540 deficiency in petitioner'sFederal income tax for 2010 and a $708 penalty under section 6662(a). The issuesfor decision are: (1) whether petitioner is entitled to three dependency exemptiondeductions for his two children and one grandchild; (2) whether he is entitled tohead of household filing status; and (3) whether he is liable for the penalty.- 2 -[*2] Unless otherwise indicated, all section references are to the Internal RevenueCode in effect for the year in issue, and all Rule references are to the Tax CourtRules of Practice and Procedure.FINDINGS OF FACTSome of the facts have been stipulated, and the stipulated facts areincorporated in our findings by this reference. Petitioner resided in Massachusettsat the time his petition was filed.During 2010, petitioner, his daughter and son (both adults), and hisgrandchild CML, the minor child of his daughter, all resided in petitioner's home.(The Court refers to minor children by only their initials. SeeRule 27(a)(3).)Petitioner's son filed his 2010 Federal income tax2015 Tax Ct. Memo LEXIS 25">*26  return on February 28,2011. On that return, the son claimed a personal exemption deduction for himself.He also claimed $1,129 in refundable tax credits and $75 withheld tax, resulting ina refund of $1,204.Petitioner's daughter also filed her 2010 Federal income tax return onFebruary 28, 2011. She reported gross income of $11,892 and claimed a personalexemption deduction for herself and a dependency exemption deduction for CML.The daughter also claimed $4,450 in refundable credits and $840 withheld tax,resulting in a refund of $5,290.- 3 -[*3] After being granted an extension of time to file, petitioner timely filed his2010 Federal income tax return on May 23, 2011. On his tax return, petitionerclaimed head of household filing status and dependency exemption deductions forhis son, his daughter, and CML.OPINIONThe Internal Revenue Code allows as a deduction an exemption for eachdependent of a taxpayer in computing taxable income. Sec. 151(c). Section152(a) defines a dependent as a qualifying child or a qualifying relative of thetaxpayer. In addition to other requirements, a qualifying child must be under theage of 19 or a student and under the age of 24 as of the close of the calendar yearin which2015 Tax Ct. Memo LEXIS 25">*27  the taxable year of the taxpayer begins. Sec. 152(c)(1)(C), (3). Inaddition to other requirements, a qualifying relative must have an annual grossincome of less than the exemption amount, and the taxpayer must provide overone-half of the qualifying relative's support. Sec. 152(d).Petitioner's daughter and son were both adults in 2010 (i.e., not under 19).Petitioner did not establish, and nothing in the record indicates, that his childrenwere under 24 and students. Likewise, petitioner did not present evidenceshowing that he provided over one-half of his daughter's or son's support in 2010.Moreover, his daughter reported gross income of $11,892 for 2010, which is over- 4 -[*4] the $3,650 exemption amount for that year. For these reasons, the daughterand the son are neither qualifying children nor qualifying relatives.Section 152(c)(4) provides a "tie-breaker rule" when multiple taxpayers areclaiming the same child as a qualifying child. In such an instance, the child shallbe treated as the qualifying child of the taxpayer who is a parent as opposed toanyone who is not. Sec. 152(c)(4)(A)(i). Accordingly, petitioner did not haveauthority to claim CML as a qualifying child for 2010 because his daughter,CML's mother, had already done so. Petitioner is also2015 Tax Ct. Memo LEXIS 25">*28  not entitled to claim CMLas a qualifying relative because, among other things, CML is a qualifying child ofhis daughter. Seesec. 152(d)(1)(D).Petitioner contends that his daughter's claim of CML as a dependent was aninadvertent error due to use of software in preparing her return. He asserts that hisdaughter executed an affidavit in December 2012 confirming their agreement thathe could claim CML as his dependent. That affidavit is not in evidence and wouldnot change the result. Petitioner's daughter filed a return in February 2011claiming CML as a dependent, and she received a substantial refund as a result.She did not file a timely amended return, and the Internal Revenue Service (IRS)is barred at this point from determining a deficiency against her. In any event, shehad already made that claim when petitioner filed his own return in May 2011, and- 5 -[*5] he is not entitled to duplicate the dependency claim. Section 152 is designed,in part, to ensure that a dependency exemption be claimed on only one tax return.Section 1(b) establishes a special income tax rate for an individual filing ashead of a household. To qualify as head of a household, a taxpayer must havebeen unmarried at the end of the taxable year and maintained2015 Tax Ct. Memo LEXIS 25">*29  a household that, formore than one-half of the taxable year, was the principal place of abode for aqualifying child or any other person who is a dependent of the taxpayer, if thetaxpayer is entitled to a deduction for the taxable year for such person undersection 151. Sec. 2(b)(1).To support his position, petitioner cites Swiggart v. Commissioner, T.C.Memo. 2014-172. The relevant portion of that case, however, is distinguishable.In Swiggart, a taxpayer parent who was eligible to claim his child as a qualifyingchild chose not to do so because he had made an agreement with the child'smother to waive the deduction for certain years, including the year in issue. TheIRS agreed that the actual act of claiming a child as a dependent was not requiredto qualify as head of household. Id. at *2.In contrast to the taxpayer in Swiggart, petitioner was not eligible to claimhis children or CML as dependents. Accordingly, petitioner is not entitled to headof household filing status.- 6 -[*6]Section 6662 Accuracy-Related PenaltyRespondent determined a section 6662(a) penalty for petitioner's 2010 taxyear. Section 6662(a) and (b)(1) and (2) imposes a 20% accuracy-related penaltyon any underpayment of Federal income tax attributable to, among other things, ataxpayer's negligence or2015 Tax Ct. Memo LEXIS 25">*30  disregard of rules or regulations, or a substantialunderstatement of income tax. An understatement of income tax is substantial if itexceeds the greater of 10% of the tax required to be shown on the return or$5,000. Sec. 6662(d)(1)(A).Under section 7491(c), the Commissioner bears the burden of productionwith regard to penalties and must come forward with sufficient evidenceindicating that it is appropriate to impose penalties. Higbee v. Commissioner, 116T.C. 438, 446-447 (2001). Respondent did not address the penalty in the pretrialmemorandum or at trial, and it will not be sustained.We have considered the other arguments of the parties, and they are notmaterial to our conclusions.- 7 -[*7] To reflect the foregoing,Decision will be entered forrespondent as to the deficiency and forpetitioner as to the penalty.