Poehlein v. Comm'r

T.C. Summary Opinion 2007-2
UNITED STATES TAX COURT
NATHAN ANDREW POEHLEIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9549-04S. Filed January 3, 2007.
Nathan Andrew Poehlein, pro se.
Russell D. Pinkerton, for respondent.
GOLDBERG, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
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Respondent determined a deficiency in petitioner’s Federal
income tax of $4,600 for the taxable year 2002. The issues for
decision are: (1) Whether petitioner is entitled to dependency
exemption deductions for his children, AP and GP;1 (2) whether
petitioner is entitled to head-of-household filing status; and
(3) whether petitioner is entitled to an earned income credit.2
Background
This case was submitted fully stipulated pursuant to Rule
122. The stipulation of facts, supplemental stipulation of
facts, and the attached exhibits are incorporated herein by this
reference. At the time the petition was filed, petitioner
resided in Cannelton, Indiana.
Petitioner and Kelly Harpe have two children, their son AP
and their daughter GP (collectively, “the children”). Petitioner
and Ms. Harpe have never been married. By order of the Perry
County, Indiana Circuit Court entered February 20, 1996,
paternity of petitioner for AP was established, and petitioner
was ordered to pay $50 per week in child support. Petitioner’s
1
The Court uses only the minor children’s initials.
2
In a section of the notice of deficiency titled
“Explanation of Items”, respondent disallowed petitioner a child
tax credit. Petitioner, however, did not claim a child tax
credit on his return. Furthermore, the purported adjustment is
not reflected in respondent’s calculation of the deficiency,
which is contained in a separate section of the notice. Because
the purported adjustment does not affect the amount of tax at
issue, we do not address this matter further.
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paternity for GP was established by order of the Hancock District
Court, Commonwealth of Kentucky, entered August 13, 2003.3
Petitioner was ordered to pay $65 per week in child support.
In 2002, AP and GP lived with Ms. Harpe in government
housing in Kentucky. Petitioner worked in Indiana that year and
earned $15,372.87 of wage income. Petitioner filed his 2002
Federal income tax return as a head of household and claimed a
dependency exemption deduction for each child. Petitioner also
claimed an earned income credit with AP and GP as the qualifying
children.
In March 2004, respondent issued a notice of deficiency
denying petitioner: (1) The dependency exemption deductions; (2)
head-of-household filing status; and (3) the earned income
credit. In computing the deficiency, respondent changed
petitioner’s filing status to single.
Discussion
In general, the Commissioner’s determination set forth in a
notice of deficiency is presumed correct. Rule 142(a)(1); Welch
v. Helvering, 290 U.S. 111, 115 (1933). In certain
circumstances, however, if the taxpayer introduces credible
evidence with respect to any factual issue relevant to
ascertaining the proper tax liability, section 7491 places the
3
The paternity of GP is not in question for the taxable
year 2002. Petitioner is the father.
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burden of proof on the Commissioner. Sec. 7491(a)(1); Rule
142(a)(2). Credible evidence is “‘the quality of evidence which,
after critical analysis, [a] court would find sufficient upon
which to base a decision on the issue if no contrary evidence
were submitted’”. Baker v. Commissioner, 122 T.C. 143, 168
(2004) (quoting Higbee v. Commissioner, 116 T.C. 438, 442
(2001)). Section 7491(a)(1) applies only if the taxpayer
complies with substantiation requirements, maintains all required
records, and cooperates with the Commissioner’s requests for
witnesses, information, documents, meetings, and interviews.
Sec. 7491(a)(2). Although neither party alleges the
applicability of section 7491(a), we conclude that the burden of
proof has not shifted to respondent with respect to any of the
issues in this case.
Moreover, deductions are a matter of legislative grace and
are allowed only as specifically provided by statute. INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934).
1. Dependency Exemption Deductions
Section 151 allows as a deduction an exemption for each
dependent of the taxpayer. Sec. 151(c). Section 152(a) defines
the term “dependent”, in pertinent part, to include a son or
daughter of the taxpayer over half of whose support for the
calendar year was received from the taxpayer. “[S]upport”
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includes “food, shelter, clothing, medical and dental care,
education, and the like.” Sec. 1.152-1(a)(2)(i), Income Tax
Regs.
In determining whether an individual received more than one-
half of his or her support from the taxpayer, there shall be
taken into account the amount of support received from the
taxpayer as compared to the entire amount of support which the
individual received from all sources. Id. A special support
test applies to certain parents. Section 152(e) provides:
SEC. 152(e). Support Test in Case of Child of Divorced
Parents, Etc.--
(1) Custodial parent gets exemption.--Except as
otherwise provided in this subsection, if--
(A) a child * * * receives over half of his
support during the calendar year from his
parents--
(i) who are divorced or legally
separated under a decree of divorce or
separate maintenance,
(ii) who are separated under a written
separation agreement, or
(iii) who live apart at all times during
the last 6 months of the calendar year, and
(B) such child is in the custody of one or
both of his parents for more than one-half of the
calendar year,
such child shall be treated, for purposes of subsection
(a), as receiving over half of his support during the
calendar year from the parent having custody for a
greater portion of the calendar year (hereinafter in
this subsection referred to as the “custodial parent”).
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(2) Exception where custodial parent releases
claim to exemption for the year.--A child of parents
described in paragraph (1) shall be treated as having
received over half of his support during a calendar
year from the noncustodial parent if--
(A) the custodial parent signs a written
declaration (in such manner and form as the
Secretary may by regulations prescribe) that such
custodial parent will not claim such child as a
dependent for any taxable year beginning in such
calendar year, and
(B) the noncustodial parent attaches such
written declaration to the noncustodial parent’s
return for the taxable year beginning during such
calendar year.
For purposes of this subsection, the term “noncustodial
parent” means the parent who is not the custodial
parent.
The support test in section 152(e) applies even if the child’s
parents have never been married. King v. Commissioner, 121 T.C.
245, 248-252 (2003).
If the requirements of section 152(e)(1) are met, the child
is treated as having received over half of his support from the
custodial parent, and the custodial parent is entitled to the
dependency exemption deduction. The noncustodial parent can gain
entitlement to the deduction if the custodial parent executes a
valid written declaration under section 152(e)(2) releasing the
claim to the deduction. The declaration required under section
152(e)(2) must be made either on a completed Form 8332, Release
of Claim to Exemption for Child of Divorced or Separated Parents,
or on a statement conforming to the substance of Form 8332.
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Miller v. Commissioner, 114 T.C. 184, 188-189 (2000), affd. on
another ground sub nom. Lovejoy v. Commissioner, 293 F.3d 1208
(10th Cir. 2002); Brissett v. Commissioner, T.C. Memo. 2003-310.
The Form 8332 requires a taxpayer to furnish: (1) The names
of the children for whom exemption claims were released; (2) the
years for which the claims were released; (3) the signature of
the custodial parent confirming his or her consent; (4) the
Social Security number of the custodial parent; (5) the date of
the custodial parent’s signature; and (6) the name and the Social
Security number of the parent claiming the exemption. Miller v.
Commissioner, supra at 190.
A. Whether Section 152(e) Is Applicable
As stated above, petitioner and Ms. Harpe have never been
married. Section 152(e) therefore applies only if petitioner and
Ms. Harpe lived apart at all times during the last 6 months of
2002. See sec. 152(e)(1)(A). Living apart generally connotes
living in separate residences. Dawkins v. Commissioner, T.C.
Memo. 1991-225.
Petitioner contends that he generally stayed at his parents’
house from Sunday night through Thursday afternoon, but spent the
remainder of the week with Ms. Harpe and the children in
Kentucky. There is no evidence to support his contention, and
the joint exhibits contradict his position. A declaration by Ms.
Harpe states that petitioner did not live with her and the
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children in Kentucky in 2002. A form from the Office of Housing,
Federal Housing Commissioner, also indicates that petitioner did
not reside in the government housing unit with Ms. Harpe and the
children. We find that petitioner and Ms. Harpe lived apart at
all times during the last 6 months of 2002. Section 152(e)
therefore applies.4
B. Whether Petitioner Attached an Executed Form 8332 or a
Comparable Statement to His 2002 Tax Return
Ms. Harpe’s declaration indicates she had custody of the
children for the greater portion of 2002. Petitioner does not
dispute this statement. We therefore conclude that she is the
custodial parent for purposes of section 152(e). See sec.
152(e)(1) (flush language). Accordingly, petitioner may claim
the children as dependents only if he attached to his return a
Form 8332 or a comparable statement executed by Ms. Harpe. See
Miller v. Commissioner, supra.
Petitioner contends that he attached an executed Form 8332
to his 2002 tax return. The record, however, contains no
evidence to support this contention. A Form 8332 is not attached
to the copy of his return that was received as a joint exhibit.
Furthermore, Ms. Harpe’s declaration does not indicate that she
4
Assuming arguendo that petitioner and Ms. Harpe did live
together at some point during the last 6 months of 2002, the
result would not change. Under sec. 152(a), petitioner would
have to establish that he provided over half of AP’s and GP’s
support during 2002. The record contains no evidence that
petitioner meets this requirement with respect to either child.
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executed a Form 8332 for either child. We find that petitioner
did not attach a Form 8332 to his return. Petitioner therefore
is not entitled to dependency exemption deductions for AP and GP
in 2002. See secs. 151(a), (c), and 152(a). Respondent’s
determination on this issue is sustained.
2. Head-of-Household Filing Status
Section 1(b) imposes a special income tax rate on an
individual filing as head of household. As relevant herein,
section 2(b) defines a “head of household” as an unmarried
individual who maintains as his or her home a household which
constitutes for more than one-half of the taxable year the
principal place of abode of a child of the taxpayer. Sec.
2(b)(1)(A)(i).
As previously stated, petitioner did not live with Ms. Harpe
and the children in 2002. Accordingly, petitioner is unable to
establish that his residence constituted the principal place of
abode for AP or GP for more than one-half of the taxable year.
Petitioner therefore is not entitled to head-of-household filing
status, and respondent’s determination on this issue is
sustained.
3. Earned Income Credit
Subject to certain limitations, an eligible individual is
allowed a credit which is calculated as a percentage of the
individual’s earned income. Sec. 32(a)(1). Earned income
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includes wages. Sec. 32(c)(2)(A). Section 32(c)(1)(A)(i), in
pertinent part, defines an “eligible individual” as “any
individual who has a qualifying child for the taxable year”. A
“qualifying child” is one who satisfies a relationship test, a
residency test, and an age test. Sec. 32(c)(3). The pertinent
parts of section 32(c)(3) provide:
(3) Qualifying child.--
(A) In general.--The term “qualifying child” means,
with respect to any taxpayer for any taxable year, an
individual--
(i) who bears a relationship to the taxpayer
described in subparagraph (B),
(ii) who has the same principal place of abode as
the taxpayer for more than one-half of such taxable
year, and
(iii) who meets the age requirements of
subparagraph (C).
As previously stated, petitioner has not established that
his residence was the principal place of abode for AP or GP for
more than one-half of the taxable year 2002. Accordingly, we
conclude that the children fail the residency test of section
32(c)(3)(A)(ii). Respondent’s determination on this issue is
sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
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To reflect the foregoing,
Decision will be entered for
respondent.