Filed: Jul. 19, 2012
Latest Update: Jul. 19, 2012
Summary: MEMORANDUM OPINION ARMEN, Special Trial Judge. This case is before the Court on respondent's Motion For Summary Judgment, filed March 13, 2012, pursuant to Rule 121. 1 In his motion respondent moves for a summary adjudication in his favor as to the underlying deficiencies, additions to tax, and penalties determined by him in the notice of deficiency. Petitioners filed an Objection to respondent's motion on May 9, 2012. Thereafter, by Order dated June 13, 2012, respondent's motion was assigned
Summary: MEMORANDUM OPINION ARMEN, Special Trial Judge. This case is before the Court on respondent's Motion For Summary Judgment, filed March 13, 2012, pursuant to Rule 121. 1 In his motion respondent moves for a summary adjudication in his favor as to the underlying deficiencies, additions to tax, and penalties determined by him in the notice of deficiency. Petitioners filed an Objection to respondent's motion on May 9, 2012. Thereafter, by Order dated June 13, 2012, respondent's motion was assigned ..
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MEMORANDUM OPINION
ARMEN, Special Trial Judge.
This case is before the Court on respondent's Motion For Summary Judgment, filed March 13, 2012, pursuant to Rule 121.1 In his motion respondent moves for a summary adjudication in his favor as to the underlying deficiencies, additions to tax, and penalties determined by him in the notice of deficiency. Petitioners filed an Objection to respondent's motion on May 9, 2012. Thereafter, by Order dated June 13, 2012, respondent's motion was assigned for disposition.
As a threshold matter we must decide whether disposition of this case by summary judgment is appropriate. If so, we must then decide whether petitioners are entitled to the dependency exemption deductions and the child tax credits claimed by them on their returns for the years in issue.
At the time that the petition was filed, petitioners resided in Israel.
Background
Petitioners are a married couple and were married throughout the period at issue in this case, i.e., the taxable (calendar) years 2004, 2005, 2006, and 2007. During that period petitioners resided in Israel. Petitioner Daniel Stern was a U.S. citizen, whereas petitioner Reizel Stern was not.
Petitioners have many children. Throughout the period at issue petitioners' children resided in Israel. None of petitioners' children was born as a U.S. citizen, and none of petitioners' children became a U.S. citizen until July 14, 2008.2 Petitioners filed joint Federal income tax returns for the years in issue.3 Petitioners filed their returns on the following dates:
Year Date Filed
2004 June 11, 2008
2005 Feb. 4, 2009
2006 Sept. 18, 2008
2007 Sept. 18, 2008
On their Federal income tax returns for the years in issue, petitioners claimed personal exemptions for themselves and dependency exemptions for their children as follows:
Number of Exemptions Claimed
Year Personal Dependency Total
2004 2 7 9
2005 2 8 10
2006 2 8 10
2007 2 9 11
Also on their Federal income tax returns for the years in issue, petitioners reported and claimed the following items in the indicated amounts:
Reported Claimed
Tax Liability1 Additional Refund
Year Earned Income < CTC > CTC CTC rec'd
2004 $49,000 $1,143 -0- $5,738 $5,738
2005 55,400 1,343 -0- 6,657 6,657
2006 56,200 1,293 -0- 6,707 6,707
2007 55,400 1,343 -0- 6,657 6,657
In the notice of deficiency respondent disallowed the dependency exemption deductions, the child tax credit, and the additional child tax credit claimed by petitioners for each of the years in issue.4 Respondent also determined that for each of the years in issue, petitioners were liable for the addition to tax under section 6651(a)(1) and for the accuracy-related penalty under section 6662(a).
Petitioners timely filed a petition for redetermination challenging respondent's deficiency determinations. See sec. 6213(a). Petitioners did not challenge respondent's determinations regarding their liability for the additions to tax and the accuracy-related penalties.5
Discussion
A. Summary Judgment
Rule 121 provides for summary judgment. Summary judgment serves to "expedite litigation and avoid unnecessary and expensive trials." Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Either party may move for summary judgment upon all or any part of the legal issues in controversy but we may grant summary judgment only if there are no genuine issues of material fact. Rule 121(a); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
As the moving party, respondent bears the burden of proving that no genuine issue exists as to any material fact and that respondent is entitled to judgment as a matter of law. See FPL Group, Inc. v. Commissioner, 115 T.C. 554, 559 (2000). Petitioners, as the party opposing summary judgment, must do more than simply suggest that "there is some metaphysical doubt as to the material facts", Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986), but must set forth specific facts which show that a question of genuine material fact exists, see Rule 121(d); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
Upon review of the record we are satisfied that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. Accordingly, for the reasons that follow we shall grant respondent's motion.
B. Dependency Exemption Deductions
In the case of an individual, section 151(a) authorizes as deductions in computing taxable income the exemptions provided by such section. In particular, section 151(c) allows an exemption for each individual who is the taxpayer's dependent as defined in section 152.6
In order for a child to qualify as a dependent various requirements must be satisfied. Relevant here is the requirement that the child must be a citizen or national of the United States or a resident of the United States or a country contiguous to the United States. Sec. 152(b)(3).
In the instant case, petitioners and their children resided in Israel during the years in issue. None of petitioners' children was born as a U.S. citizen, and none became a U.S. citizen until July 14, 2008. Accordingly, none of petitioners' children qualifies as a "dependent" within the meaning of section 152, and petitioners are therefore not entitled to a dependency exemption deduction under section 151(c) for any of the years in issue. See Carlebach v. Commissioner, 139 T.C. __ (July 19, 2012).
C. Child Tax Credit
Section 24(a) allows as a credit against the tax imposed a specified amount, commonly know as the child tax credit.7 Section 24(d) makes a portion of the credit refundable, and such portion is popularly known as the additional child tax credit.
In order to qualify for a child tax credit, various requirements must be satisfied. Principal among these is the requirement that there be a "qualifying child". See sec. 24(a). Such term is defined by section 24(c). Pursuant to section 24(c)(2), a child is not a "qualifying child" for purposes of the child tax credit if such child is neither a citizen or national of the United States nor a resident of the United States.
As previously stated, during the years at issue petitioners and their children resided in Israel. None of petitioners' children was born as a U.S. citizen, and none became a U.S. citizen until July 14, 2008. Accordingly, none of petitioners' children qualifies as a "qualifying child" within the meaning of section 24, and petitioners are therefore not entitled to a child tax credit (whether refundable or nonrefundable) for any of the years in issue. See Carlebach v. Commissioner, 139 T.C. __ (July 19, 2012).
D. Conclusion
In order to give effect to the foregoing,
An appropriate order and decision will be entered.
