T.C. Summary Opinion 2010-8



                     UNITED STATES TAX COURT



                 GENISE A. CONNER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 26978-07S.              Filed January 25, 2010.



     Genise A. Conner, pro se.

     Deborah K. MacKay, for respondent.



     GOLDBERG, Special Trial Judge:    This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code

(Code) in effect at the time 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,

subsequent section references are to the Internal Revenue Code in
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effect for the year in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure.

     Respondent determined a deficiency of $2,681 in

petitioner’s Federal income tax for 2006.    The issues for

decision are whether petitioner is entitled to:    (1) A

dependency exemption deduction for her niece JT;1 (2) an earned

income credit; (3) a child tax credit; and (4) head of household

filing status.

                             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.    Petitioner resided in

Illinois when she filed her petition.

     Throughout 2006 petitioner worked as a technician at

Heartland Pharmacy, where her main job was premixing medicines

for use in hospitals.

     JT is petitioner’s niece, the daughter of petitioner’s

brother and his estranged girlfriend, Ms. Tigue.    JT was 12

years old in 2006.

     In late 2005 Ms. Tigue told petitioner that she had lost

her apartment, was out of work, and had no place to live.     Ms.

Tigue wanted JT both to have a stable place to live and to

remain in the same school.   Petitioner has seven or eight


     1
      The Court redacts the names of minors.   See Rule 27(a)(3).
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grandchildren, most of whom at various times have lived with

her.    Petitioner offered to take in JT because two of her

grandchildren had recently moved out of her apartment, thereby

creating space, and because JT was her niece.    Thus, in late

2005 JT began living with petitioner, and this living

arrangement continued until early 2008.

       In 2006 petitioner lived in a two-bedroom apartment.

Petitioner and her adult niece, Monia Conners, signed a 1-year

lease on October 1, 2005, which they renewed in 2006.     The

apartment is a second-floor unit consisting of two bedrooms, a

living and dining room combination, a kitchen, and one bathroom.

       Four people shared this apartment during 2006:   Petitioner,

JT, Ms. Conners, and Ms. Conners’ daughter (petitioner’s

grandniece) who was about the same age as JT.    Ms. Conners’

daughter slept in one bedroom with Ms. Conners, and JT slept in

petitioner’s bedroom.    When Ms. Conners was employed, petitioner

and Ms. Conners shared the rent and utilities.    However, because

Ms. Conners was unemployed for most of 2006, petitioner paid the

expenses for the apartment.

       Ms. Tigue did not have a permanent residence during 2006.

She occasionally stayed overnight at petitioner’s apartment.       At

other times, petitioner did not know where Ms. Tigue was living
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because Ms. Tigue drifted among the homes of various friends and

relatives throughout 2006.

     JT continued to attend junior high school in the school

district where JT and Ms. Tigue had lived before Ms. Tigue lost

her apartment, approximately 20 miles from petitioner’s

apartment.   Petitioner usually drove JT to school.   If

petitioner was unable to take JT to school because of a change

in petitioner’s work schedule, Ms. Tigue would drop off JT at

school in the morning and return JT to petitioner’s apartment

after school, where the other relatives would care for JT.

Occasionally, if petitioner was working late, and no one was in

the apartment to care for JT, Ms. Tigue would bring JT to the

location where she was living and would care for JT until

petitioner arrived to take JT home.

     Petitioner was not JT’s point of contact on school records.

Because Ms. Tigue wanted JT to attend the same school, she did

not change JT’s school records or contact information.

Petitioner did not receive any of JT’s report cards from school.

     Ms. Tigue worked intermittently during 2006 and did not

receive unemployment benefits or any type of public assistance.

Petitioner provided all of the support for JT during the year.

This included buying JT’s food, providing housing, paying for

clothing, and providing spending money.
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     Petitioner engaged a national tax preparation firm to

prepare her 2006 Federal income tax return.   Petitioner filed

as a head of household, claimed a dependency exemption

deduction for JT, provided JT’s taxpayer identification number,

reported wages of $28,775, and claimed a standard deduction, an

earned income credit, and a child tax credit.   These items

resulted in an overpayment of $3,066, of which $516 pertained

to the earned income credit.

     Respondent, in a notice of deficiency, changed

petitioner’s filing status to single and disallowed the

dependency exemption deduction for JT, the earned income tax

credit, and the child tax credit.

     After receipt of the notice of deficiency petitioner met

with respondent’s representative, who told petitioner to

provide a letter from JT’s mother confirming that JT lived with

petitioner during 2006.   Subsequently, petitioner obtained and

mailed to respondent a signed and notarized letter dated

January 9, 2008, from Ms. Tigue stating that she allowed JT to

live with petitioner for 2006.   After reviewing the notarized

letter respondent issued a notice dated September 8, 2008,

stating that:   (1) Petitioner was recertified for the earned

income credit (EIC) for 2006; (2) in the future petitioner

would not have to complete Form 8862, Information To Claim

Earned Income Credit After Disallowance; and (3) petitioner
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would receive her 2006 EIC refund within 6 weeks.    On or about

October 31, 2008, petitioner received a refund check for

$2,367, reflecting her entire overpayment for 2006, less an

amount she owed for 2005.

                               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 showing that the determination is in error.

Rule 142(a); Welch v. Helvering, 

, 115 (1933).

Under section 7491(a) the burden may shift to the Commissioner

regarding factual matters if the taxpayer produces credible

evidence and meets the other requirements of the section.

Petitioner does not argue that she satisfied the elements for a

burden shift, but even if she did, we need not and explicitly

do not decide the issue because we resolve this case on the

preponderance of the evidence and not on an allocation of the

burden of proof, rendering the issue of burden moot.    See

Knudsen v. Commissioner, 131 T.C. __, __ (2008) (slip op. at 6-

7); Cyman v. Commissioner, T.C. Memo. 2009-144.

II.    Deductions in General

       Deductions are a matter of legislative grace, and

taxpayers must satisfy the statutory requirements for claiming

the deductions.    See INDOPCO, Inc. v. Commissioner, 

7 -

79, 84 (1992); New Colonial Ice Co. v. Helvering, 

,

440 (1934).   Taxpayers must maintain adequate records to

substantiate the amounts of credits and deductions claimed.

See sec. 6001; sec. 1.6001-1(a), Income Tax Regs.

     A.   Dependency Exemption Deduction

     A taxpayer may claim a dependency exemption deduction for

each individual who is a dependent (as defined in section 152)

of the taxpayer for the year.     Sec. 151(a), (c).   The

definition of the term “dependent” includes a qualifying child

of the taxpayer.   Sec. 152(a).

     The taxpayer must establish that, pertinent here, the

qualifying child satisfies the following four requirements of

section 152(c)(1):   (1) Bears a relationship to the taxpayer as

described in section 152(c)(2); (2) has the same principal

place of abode as the taxpayer for more than one-half of the

taxable year; (3) meets the age requirement of section

152(c)(3); and (4) has not provided more than one-half of his

or her own support for the taxable year.

     JT satisfies the relationship requirement because she is

the descendant of petitioner’s brother; namely, his daughter.

Sec. 152(c)(2)(B).   JT satisfies the residency test for 2006

because JT lived in petitioner’s apartment with petitioner for

the entire year, as confirmed by the notarized letter from JT’s

mother, Ms. Tigue.   JT also satisfies the age requirement
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because JT reached age 12 in 2006 and was therefore under age

19 at the close of the taxable year.      Sec. 152(c)(3)(A)(i).

     With respect to the remaining test, whether JT provided

more than one-half of her own support in 2006, we observe that

JT reached age 12 in 2006, was a full-time junior high school

student, and had no earnings.     Thus, we find JT provided none

of her own support.

     Accordingly, we conclude that petitioner is entitled to a

dependency exemption deduction for JT for 2006 because JT is

petitioner’s qualifying child within the definition of section

152(c).

     B.   Earned Income Credit

     Subject to certain limitations, an eligible individual is

allowed a tax credit calculated as a percentage of the

individual’s earned income.    Sec. 32(a)(1).    Earned income

includes wages.    Sec. 32(c)(2)(A)(i).    An eligible individual

includes “any individual who has a qualifying child for the

taxable year”.    Sec. 32(c)(1)(A)(i).

     We have already concluded that JT is a qualifying child of

petitioner for 2006.    We also note that after petitioner

submitted a notarized letter from JT’s mother confirming that

JT lived with petitioner during all of 2006, respondent issued

a notice dated September 8, 2008, allowing petitioner the

earned income credit for 2006.     Subsequently, respondent issued

a refund check for 2006 including the amount for petitioner’s
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2006 EIC.    Accordingly, petitioner is entitled to the earned

income credit for 2006 because respondent has allowed the

credit and petitioner meets the requirements of section 32.

     C.    Child Tax Credit

     A taxpayer may claim a child tax credit for each

qualifying child of the taxpayer as defined in section 152(c).

Sec. 24(a), (c)(1).    Again, we have already concluded that JT

is petitioner’s qualifying child for purposes of the dependency

exemption deduction under section 152(c).

     Further, petitioner meets the other requirements for the

child tax credit.    Her adjusted gross income in 2006 was below

the phaseout amount of $75,000 for an individual who is not

married.    See sec. 24(b)(2)(B).   Petitioner included JT’s name

and Social Security number on the Form 1040, U.S. Individual

Income Tax Return, that petitioner filed for 2006.     See sec.

24(e).    Consequently, petitioner is entitled to the child tax

credit for 2006.

     D.    Head of Household Filing Status

     The final issue is whether petitioner is eligible to file

as a head of household for 2006.     Section 1(b) provides a

favorable income tax rate for an individual filing as a head of

household.    As relevant here, to qualify as a head of household

a taxpayer must:    (1) Be unmarried at the end of the taxable

year; (2) not be a surviving spouse; and (3) maintain as the

taxpayer’s home a household that constitutes for more than one-
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half of the taxable year the principal place of abode of a

qualifying child of the taxpayer as defined in section 152(c).

Sec. 2(b)(1).

     We have already held that JT is a qualifying child of

petitioner with respect to section 152(c).   Furthermore,

petitioner was not married at the end of 2006, was not a

surviving spouse, and maintained her apartment for more than

one-half of 2006 as JT’s principal place of abode.     Accordingly,

petitioner is entitled to file as a head of household for 2006.

     To reflect the foregoing,


                                          Decision will be entered

                                     for petitioner.