T.C. Summary Opinion 2009-188



                     UNITED STATES TAX COURT



                  AARON LEE HILL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 28057-08S.              Filed December 10, 2009.




     Aaron Lee Hill, pro se.

     Nicholas Doukas, for respondent.



     PANUTHOS, Chief Special Trial Judge:   This case was heard

pursuant to the provisions of section 7463 of the Internal

Revenue Code in effect when the petition was filed.   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.   Unless otherwise indicated,
                                - 2 -

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.

     Respondent determined a $5,840 deficiency in petitioner’s

2007 Federal income tax.    The issues for decision are whether

petitioner:   (1) Is entitled to dependency exemption deductions

for his niece and nephew; (2) qualifies as a head of household;

(3) is entitled to child tax credits; and (4) is entitled to an

earned income credit (EIC).

                              Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.     At the time the petition

was filed, petitioner resided in California.

     A.M.1 is the son of Demetria L. Hill (Ms. Hill) and was 9

years old in 2007.    S.M. is the daughter of Ms. Hill, and was 1

year old in 2007.    Petitioner is the brother of Ms. Hill, and

A.M. and S.M. are his nephew and niece, respectively.

     Ms. Hill has four children and, at some time before the

beginning of 2007, experienced difficulty in providing for her

children.   Ms. Hill was unable to provide a home for her children

and, in fact, was living with a friend during 2007.    Ms. Hill and


     1
      The Court refers to minor children by their initials.    Rule
27(a)(3).
                                - 3 -

petitioner agreed that two of her children would live with Ms.

Hill at her friend’s home, and A.M. and S.M. would live with

petitioner.    This arrangement began before 2007 and continued

throughout the year.

     Petitioner was living with a female domestic partner during

2007, and the couple cared for A.M. and S.M. insofar as providing

lodging, childcare, most evening meals, and transportation to and

from school.    For 2007 petitioner reported approximately $17,000

in total income.    Petitioner’s domestic partner earned

approximately $100,000 in 2007.

     During weekdays petitioner’s mother provided childcare for

S.M. while A.M. attended school and had breakfast and lunch

provided by the school.    Petitioner’s mother also provided

childcare for A.M. and Ms. Hill’s other two children after

school.   Petitioner’s mother’s address was used for the children

so they could all attend the same school and so that they could

all stay together for some time after school.    At the end of the

day petitioner picked up A.M. and S.M. and brought them to his

home.   Petitioner’s mother delivered the other two children to

Ms. Hill.

     Petitioner paid his mother approximately $400 per month for

childcare for A.M. and S.M.    Petitioner also paid approximately

$400 per month to his domestic partner for the costs of

maintaining the home.    Additionally, petitioner spent
                               - 4 -

approximately $200 in groceries per month for A.M. and S.M.

There is no evidence that A.M.’s and S.M.’s mother or any other

persons provided support for the children.

     In early 2008 petitioner prepared his 2007 tax return using

a computer program.   On the return he reported head of household

status, claimed dependency exemption deductions, the EIC, and

child tax credits with respect to A.M. and S.M. and claimed a

refund of $5,678.

     As indicated, on September 2, 2008, respondent issued a

notice of deficiency determining a deficiency of $5,840.   Only

the face page and the waiver page of the notice of deficiency

were included in the record.   It appears respondent’s adjustment

reflects a single filing status with no dependents and further,

that petitioner is ineligible for the claimed dependency

exemption deductions, the EIC, and child tax credits.2

                            Discussion

     In general, the Commissioner’s determinations set forth in a

notice of deficiency are presumed correct, and the taxpayer bears

the burden of showing that the determinations are in error.    Rule

142(a); Welch v. Helvering, 

, 115 (1933).    Deductions


     2
      Petitioner’s income, without claiming the dependency
exemption deductions, would make him ineligible for the EIC.
Changing his filing status and disallowing the deductions and
credits would show petitioner owing a tax of about $162. This
amount, in addition to the $5,678 refund, results in the
deficiency of $5,840.
                               - 5 -

are a matter of legislative grace.     Deputy v. du Pont, 

, 493 (1940); New Colonial Ice Co. v. Helvering, 

,

440 (1934).   A taxpayer bears the burden of proving that the

taxpayer is entitled to any deduction claimed.    Rule 142(a);

INDOPCO, Inc. v. Commissioner, 

, 84 (1992); Welch v.

Helvering, supra; Wilson v. Commissioner, T.C. Memo. 2001-139.       A

taxpayer is required to maintain records sufficient to

substantiate deductions claimed on his or her income tax return.

Sec. 6001; sec. 1.6001-1(a), (e), Income Tax Regs.    The fact that

a taxpayer reports a deduction on a return is not sufficient to

substantiate the claimed deduction.    Wilkinson v. Commissioner,

, 639 (1979); Roberts v. Commissioner, 

,

837 (1974).   Rather, an income tax return is merely a statement

of the taxpayer’s claim; it is not presumed to be correct.

Wilkinson v. Commissioner, supra at 639; Roberts v. Commissioner,

supra at 837; see also Seaboard Commercial Corp. v. Commissioner,

, 1051 (1957) (a taxpayer’s income tax return is a

self-serving declaration that may not be accepted as proof for

the claimed deduction or exclusion); Halle v. Commissioner, 

(1946) (a taxpayer’s income tax return is not self-

proving as to the truth of its contents), affd. 

(2d

Cir. 1949).
                                  - 6 -

       Pursuant to section 7491(a), the burden of proof as to

factual matters shifts to the Commissioner under certain

circumstances.    Petitioner has neither alleged that section

7491(a) applies nor established his compliance with the

substantiation and recordkeeping requirements.      Sec.

7491(a)(2)(A) and (B).    Petitioner therefore bears the burden of

proof.    See Rule 142(a).

I.     Dependency Exemption Deductions

       Section 151 allows a deduction for each individual who

qualifies as a dependent of the taxpayer as defined in section

152.    Section 152(a) provides that a dependent means a qualifying

child or a qualifying relative.      Section 152(c)(1) defines a

“qualifying child” as an individual:

            (A) who bears a relationship to the taxpayer, such as a
       descendant of the taxpayer’s brother or sister;

            (B) who has the same principal place of abode as the
       taxpayer for more than one-half of such taxable year (aside
       from special rules applicable to divorced or separated
       parents);

            (C) who is under the age of 19 or is a student who has
       not attained the age of 24 as of the close of the calendar
       year and

            (D) who has not provided over one-half of such
       individual’s own support for the calendar year in which the
       taxable year of the taxpayer begins.

       Petitioner has produced sufficient evidence to show A.M. and

S.M. meet the requirements of section 152(c)(1)(A) since they are

children of his sister.      Petitioner has produced credible
                               - 7 -

evidence to show both that the children resided with him for more

than one-half of 2007 and the ages of A.M. and S.M. (1 and 9 in

2007) to meet the requirements of section 152(c)(1)(B) and (C).

The Court is further satisfied that the children, ages 1 and 9,

did not provide more than one-half of their own support in 2007,

and there is no evidence that A.M. and S.M. received any other

support as defined in section 1.152-1(a)(2), Income Tax Regs.

Thus, the children meet the requirement of section 152(c)(1)(D).

Consequently, A.M. and S.M. are “qualifying children” under

section 152(c) and are thus petitioner’s dependents under section

152(a)(1).   Consequently, petitioner is entitled to dependency

exemption deductions for the two children.3

II.   Head of Household Filing Status

      Section 1(b) imposes a special tax rate on an individual

taxpayer who files a Federal income tax return as a head of

household.   Section 2(b) defines a head of household as an

individual taxpayer who:   (1) Is unmarried as of the close of the

taxable year and is not a surviving spouse; and (2) maintains as

his home a household that constitutes for more than one-half of

the taxable year the principal place of abode, as a member of


      3
      We recognize that our conclusion suggests a finding that
virtually all of petitioner’s expendable income went to support
the children. We found petitioner’s testimony to be credible,
and we are satisfied that he was committed to caring for his
sister’s children at a time when his sister was unable to care
for them.
                               - 8 -

such household, of a dependent for whom the taxpayer is entitled

to a deduction under section 151.   See also, e.g., Rowe v.

Commissioner, 

, 16-17 (2007).    The taxpayer is

considered as maintaining a household only if the taxpayer

furnishes over one-half of the cost of maintaining the household.

Sec. 2(b)(1).

     In order for the Court to determine whether the taxpayer

provided over one-half of the cost of maintaining the household,

the taxpayer must prove the total cost of maintaining the

household.   Costs of maintaining a household include “property

taxes, mortgage interest, rent, utility charges, upkeep and

repairs, property insurance, and food consumed on the premises.”

Sec. 1.2-2(d), Income Tax Regs.

     As indicated, petitioner testified that he gave his domestic

partner approximately $400 per month for household expenses and

expended approximately $200 per month on food for the household.

There is no evidence of the total cost of maintaining the

household.   Without evidence showing the total cost, the Court

cannot conclude that petitioner has provided more than one-half

of the cost of maintaining the household.   Since petitioner has

not provided evidence to show he maintained the household as

defined in the regulations, he is not entitled to head of

household filing status.
                                  - 9 -

III. Earned Income Credit

      An eligible individual is entitled to a credit against his

Federal income tax liability, calculated as a percentage

of his earned income, subject to certain limitations.    Sec.

32(a)(1); Rowe v. Commissioner, supra at 15.     Different

percentages and amounts are used to calculate the EIC, depending

on whether the eligible individual has no qualifying children,

one qualifying child, or two or more qualifying children.    Sec.

32(b); Rowe v. Commissioner, supra at 15.     A “qualifying child”

means a qualifying child of the taxpayer as defined in section

152(c).   Sec. 32(c)(3)(A).

      As previously discussed, A.M. and S.M. are petitioner’s

qualifying children; thus, petitioner is entitled to the EIC for

2007 with two qualifying children.

IV.   Child Tax Credits

      Section 24(a) provides a credit with respect to each

qualifying child of the taxpayer.     Section 24(c)(1) defines the

term “qualifying child” as “a qualifying child of the taxpayer

(as defined in section 152(c)) who has not attained age 17.”4

The child tax credit may not exceed the taxpayer’s regular

tax liability.   Sec. 24(b)(3).    Where a taxpayer is eligible for

      4
      The credit is reduced by $50 for each $1,000 (or fraction
thereof) by which an individual’s modified adjusted gross income
exceeds $110,000 in the case of a joint return, $75,000 in the
case of an unmarried individual, and $55,000 in the case of a
married individual filing a separate return. Sec. 24(b).
                             - 10 -

the child tax credit but the taxpayer’s regular tax liability is

less than the amount of the child tax credit potentially

available under section 24(a), section 24(d) makes a portion of

the credit, known as the additional child tax credit, refundable.

     Since A.M. and S.M. are qualifying children and as noted

above were below the age 17 in 2007, petitioner is entitled to

the child tax credit and the additional child tax credit.

     To reflect the foregoing,


                                        Decision will be entered

                                   under Rule 155.