Milton H. Thomas, II & Priscilla Snelling Thomas v. Commissioner

T.C. Summary Opinion 2019-24
UNITED STATES TAX COURT
MILTON H. THOMAS II AND PRISCILLA SNELLING THOMAS, Petitioners
v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 21655-17S. Filed August 26, 2019.
Milton H. Thomas II and Priscilla Snelling Thomas, pro sese.
Christopher D. Bradley, for respondent.
SUMMARY OPINION
PANUTHOS, Special Trial Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect when the
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petition was filed.1 Pursuant to section 7463(b), the decision to be entered is not
reviewable by any other court, and this opinion shall not be treated as precedent
for any other case.
In a notice of deficiency dated October 2, 2017, respondent determined a
deficiency of $5,000 in petitioners’ 2015 Federal income tax. After concessions,2
the sole issue for decision is whether petitioners are entitled to the American
Opportunity Credit related to their daughter ET.3
Background
Some of the facts have been stipulated, and we incorporate the stipulation of
facts by this reference. Petitioners resided in Georgia when the petition was
timely filed.
Petitioners have two daughters, ET and EMT, who were each enrolled in
postsecondary education during taxable year 2015. Petitioners’ older daughter,
1
Unless otherwise indicated, section references are to the Internal Revenue
Code (Code) in effect for the year in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure. We round monetary amounts to the
nearest dollar.
2
Respondent concedes that, for the 2015 taxable year, petitioners are entitled
to deduct $2,885 in education expenses and that they are entitled to the American
Opportunity Credit for their younger daughter, EMT.
3
We refer to petitioners’ children by their initials.
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ET, was enrolled at Columbus State University in Columbus, Georgia, from fall
2011 through fall 2015. During that time ET completed nine scholastic semesters
plus summer school for a total of 4½ years of postsecondary education. She
graduated with her bachelor’s degree in December 2015. Petitioners’ daughter
EMT began her first year of postsecondary study in fall 2015.
Petitioners timely filed their 2015 Form 1040, U.S. Individual Income Tax
Return. On the Form 8863, Education Credits (American Opportunity and
Lifetime Learning Credits), petitioners claimed the nonrefundable education credit
of $3,000 and the refundable American Opportunity Credit of $2,000. The
claimed education credits relate to education expenses for ET and EMT.
Petitioners had previously claimed the American Opportunity Credit on
their Forms 1040 for tax years 2011, 2012, 2013, and 2014. They claimed the
credit for tax year 2011 in relation to both petitioner wife, Dr. Priscilla Snelling
Thomas, and ET. For tax years 2012 through 2014 they claimed the credit solely
in relation to ET. In total petitioners claimed the American Opportunity Credit in
relation to ET’s postsecondary education for five taxable years (2011 through
2015).
Respondent determined a deficiency of $5,000 with respect to petitioners’
2015 Federal income tax. The deficiency resulted from respondent’s disallowance
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of petitioners’ claimed education credit and American Opportunity Credit, based
upon the determination that petitioners had failed to supply supporting information
for the credits. Respondent now concedes that petitioners have substantiated
$2,885 in education expenses for taxable year 2015, as well as their entitlement to
the American Opportunity Credit for EMT. The issue is whether they are entitled
to any greater amount of American Opportunity Credit for ET.
Discussion
I. Burden of Proof
In general, the Commissioner’s determination set forth in a notice of
deficiency is presumed correct, and the taxpayer bears the burden of proving that
the determination is in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115
(1933). Like deductions, tax credits are a matter of legislative grace, and the
taxpayer bears the burden of proving that he or she is entitled to any credit
claimed. See Rule 142(a); Deputy v. du Pont, 308 U.S. 488, 493 (1940); New
Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Taxpayers must also
maintain adequate records to substantiate the amounts of any credits. See sec.
6001; sec. 1.6001-1(a), Income Tax Regs.
Pursuant to section 7491(a), the burden of proof as to factual matters shifts
to the Commissioner under certain circumstances. Petitioners did not allege or
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otherwise show that section 7491(a) applies. See sec. 7491(a)(2)(A) and (B).
Therefore, petitioners bear the burden of proof. See Rule 142(a).
II. Education Credits
The Code allows for a variety of education credits, including the American
Opportunity Credit, a modified version of the Hope Scholarship Credit that was in
effect for tax year 2015. See sec. 25A(i). The American Opportunity Credit
provides for a credit against tax equal to 100% of qualified tuition and related
expenses paid by a taxpayer during the taxable year up to $2,000, plus 25% of
such expenses paid that exceed $2,000 but do not exceed $4,000, allowing for a
maximum credit of $2,500. Sec. 25A(i)(1). Up to 40% of the credit may be
refundable. Sec. 25A(i)(5). The credit is allowed for the first four years of
postsecondary education for qualified tuition and expenses including required
course materials. Sec. 25A(i)(2) and (3). The credit is allowed only for four
taxable years with respect to any eligible student. Sec. 25A(i)(2).4 To be eligible
for the credit a student must be enrolled in at least one academic period and must
4
Sec. 25A(i)(2) modifies sec. 25A(b)(2)(A) to read: “Credit allowed only
for 4 taxable years.--An election to have this section apply with respect to any
eligible student for purposes of the Hope Scholarship Credit under subsection
(a)(1) may not be made for any taxable year if such an election (by the taxpayer or
any other individual) is in effect with respect to such student for any 4 prior
taxable years.”
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be taking at least one-half of a normal full-time workload for a student in that
course of study. Sec. 25A(b)(2)(B), (3)(B).
The record shows that by 2015 petitioners had claimed and received the
American Opportunity Credit for four taxable years (2011 through 2014) in
relation to ET’s postsecondary education. Thus, they are not eligible for the credit
for ET for taxable year 2015. See sec. 25A(i)(2). On the basis of the record, we
conclude that petitioners are not entitled to the American Opportunity Credit in
relation to ET’s postsecondary education for tax year 2015.
We have considered all of the parties’ arguments, and, to the extent not
addressed herein, we conclude that they are moot, irrelevant, or without merit.
To reflect the foregoing,
Decision will be entered under
Rule 155.